Trade War II: Negative sentiment overcomes the markets

The saga around the trade negotiations has not yet ended. Yes, the new tariffs of 25% were imposed, and yesterday's negotiations did nothing. Today, however, is the last chance both sides find the right way out of the situation. In the event of a final failure, the trade war will escalate to a new level, as we will yet see China's response.

Asia was flooded in green with the hope of something happening at the last minute. European and US futures have also reflected the hopes of investors, but alas. The disappointment led to the rapid erosion of the fragile growth that Asian markets recorded for the session.

Indicatively things for Europe do not look good. Major indices are expected to open much lower, expecting sentiment to remain negative throughout the European session.

Given the situation, we expect the dollar to remain under pressure today, with the yen, the gold, the Swiss franc and the bonds rising. We expect oil and industrial metals to react negatively to the news, because the escalation of the trade war will again undermine global growth and reduce the prospects for development as well as the demand for raw materials.

Risk assets today will remain under strong pressure, with defensive sectors being preferred. Today, we expect broad indices to enter the revaluation area if the sell-off is dramatically increased. We expect volatility to rise later in the day, especially if algo traders intervene.

During the day, of course, rumors, news and twists in the relationship between the two countries are not ruled out. This will be the main topic of focus for investors.

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