Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Confrontation trade policies hit markets

Early expectations for the temporary relief on Wall Street to spread to Asia markets into Friday had once again been derailed with more confrontation trade policies out of the US, one to throw markets into a risk-off mode again.

Rude awakening for Asia markets

It had perhaps been somewhat of a rude awakening for Asia markets this morning with President Donald Trump taking trade tensions up a notch with Mexico. Announcing through twitter, the President mentioned that 5% tariffs on Mexican goods could be imposed effectively on June 10 and this can be raised to as high as 25% on October 1. The matter sparks concern on multiple fronts. Over and above the confusing signal this sends to the market as the White House prepares the USMCA trade deal approval process, this also adds concerns that the US’ more confrontational policies could see to greater risks for the US-China trade relations and global growth. There certainly is no break for risk sentiment going into the end of the week.

US futures can be seen sliding this morning following the announcement, looking to erase the gains from Thursday. While the sovereign bond rally appears to have taken a brief breather yesterday, the evasion to safety directive this morning can be seen sending yields on the decline once again. Alongside the miss seen this morning in China’s manufacturing PMI, look to the likes of USD/JPY to chart further downward trajectory going into Friday. Prices can be seen coming towards the $109 level once again just as the yield differentials continue to narrow, watch for a test here.

Source: IG Charts

China manufacturing PMI disappoints

It is a stabilization-turned-synchronized decline situation across Asia this morning with both President Donald Trump’s announcement and China’s manufacturing PMI let down, ones to trigger a risk-off atmosphere once again.

Arriving at 49.4, the May NBS manufacturing PMI had indeed realised the likelihood for disappointment against the 49.9 market consensus. This marks a return into the contraction territory for the sector while the services sector held up at 54.3, unchanged from April’s reading. Against the backdrop of the heightening trade tensions and tariffs implementation in the month of May, this may just be the start for the weaker performance to show as we anticipate the likes of industrial production and trade data later in the month.

For the rest of the session ahead, it will be a busy data day with items out of the Eurozone and the US to watch. The Fed’s preferred inflation gauge, the core PCE reading will be updated for April during US hours, though the current trade issues may overshadow into Friday.

Yesterday: S&P 500 +0.21%; DJIA +0.17%; DAX +0.54%; FTSE +0.46%

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Seize your opportunity

Deal on the world’s stock indices today.

  • Trade on rising or falling markets
  • Get one-point spreads on the FTSE 100
  • Unrivalled 24-hour pricing

See opportunity on an index?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on an index?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from one point on the FTSE 100
  • Trade more 24-hour indices than any other provider
  • Analyse and deal seamlessly on smart, fast charts

See opportunity on an index?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.