Red as the Devils

Last Monday at 5 PM everything seemed awkwardly quiet in the Belgian streets. In fact no less than 3.5 million people - 30% of the entire population - were in front of their TV screens to watch the Red Devils, the national football team, compete against Panama in their opening match of the World Cup. This set quite a new audience record!

But it was another type of competition that set the investors’ mood this week: the escalating trade tensions between the US and China as Washington imposed tariffs on $50bn of Chinese imports and threatened to introduce tariffs on an additional $200bn, while China announced increased tariffs on $34bn of goods.

As a consequence, red was also the dominant color on the markets this week. Chinese stocks suffered heavy falls with the Shanghai Composite tumbling 3.8% on Tuesday and dropping below the 3,000 point mark for the first time in almost two years, and the Hong Kong Hang Seng Index losing 3.1%. But the drop was not limited to China. Foreign manufacturers exporting to China also took a hit: shares of Boeing, Caterpillar or carmakers like Daimler, Fiat or Volkswagen sold off sharply. In fact trade tensions put equities under pressure across the board with the FTSE All World declining almost 1.5% between Monday and Thursday before slightly recovering on Friday. Over the week the Stoxx 50 lost 1.8% and the BEL20 1.0% while Ageas’ share went against the flow and gained 1.5%.