The CAC index continues to point downwards in the Tuesday session. Currently, the CAC is at 5378, down 1.33% on the day. On the release front, the ECB Forum kicks off with a speech from ECB President Mario Draghi. In the eurozone, the current account surplus narrowed for a third straight month, dropping to EUR 28.4 billion. This fell short of the estimate of EUR 30.3 billion. On Wednesday, Mario Draghi and Fed Chair Jerome Powell will participate in a panel at the European Forum.
Investors continue to monitor the brewing trade war, as trade relations between the United States and China continue to deteriorate. Investor risk appetite has softened significantly, and the CAC has declined 2.0% this week. Earlier on Tuesday, the CAC dropped to its lowest level since mid-April. The latest round of the tariff spat between the world’s two largest economies started when the U.S announced a 25 percent tariff on $50 billion in Chinese goods on Friday. After China responded with an identical move on U.S. imports, President Trump has now threatened to impose 10 percent tariffs on some $200 billion in Chinese goods. Not surprisingly, China has threatened to retaliate against this latest move. Trump has vowed to take action on the $375 billion trade deficit that the U.S has with China, claiming that the latter is guilty of unfair trade practices. With the first of the U.S tariffs scheduled to take effect on July 6 and no signs that any side will blink first, global equity markets could be headed for significant headwinds.
