Stock markets in Europe: a Trade war the US and China hinder growth
European stock markets in the short term, likely to be reduced due to the reduction of investors ‘ appetite for risky assets. Market participants try to avoid investment risk on the background of worsening trade conflict between the US and China, which negatively affects the development prospects of the world economy. After the statement of us President Donald trump of intent from September 1 to introduce a duty of 10% on goods from China worth $ 300 billion, the people’s Bank of China lowered the yuan to the dollar to the lowest since December last year.
Additional pressure on the world, including European markets, provide ongoing protests in Hong Kong. Protesters blocked roads and tunnels, and also violated the public transport and the airport. Large-scale protests in Hong Kong are due to consider amendments to the extradition act, which, if approved, will allow Hong Kong to extradite to the jurisdiction with which it has no extradition Treaty, including Taiwan, Macau and mainland China.
Negative for the British stock market was the announcement that the Bank of England lowered its growth forecasts for the country’s GDP in 2019-2020, although increased the forecast for 2021. The growth forecast for 2019 downgraded to 1.3% from 1.5%. In 2020, the growth of the UK economy is now expected at the level of 1.3% instead of 1.6% in 2021 – at 2.3 percent.
Thus, according to the Bank of England, the UK GDP in the next few quarters will remain relatively weak. The volatility in the dynamics of production can be maintained against the background of uncertainty about Brexit. However, the regulator said that the British banking sector of the country is ready for any scenario of a British exit from the European Union as well capitalized.