Stocks extend falls on US-China trade worries

The stock market sell-off gathered pace when Wall Street opened for trading earlier.

The stock market sell-off gathered pace when Wall Street opened for trading earlier. At the time of writing, the Dow was more than 600 points worse off, while the Nasdaq was 3% lower and S&P 500 about 2.5%. Sentiment has remained bearish ever since the middle of last week when US President Donald Trump unexpectedly announced fresh tariffs on China. Beijing’s response was to allow its currency to fall sharply through the 7-yuan hurdle against the dollar to a record low today. And this has clearly annoyed Trump, who earlier in a tweet labelled China a currency manipulator, adding this was a “major violation which will greatly weaken China over time!”

The sell-off has been exacerbated by concerns over the global economy. In Europe, the closely-followed Sentix investor confidence fell further into pessimism territory, printing -13.7 versus -6.9 expected and -5.8 in July, while revisions showed German services PMI had expanded at a much slower pace than anticipated in July. In the US, growth in the dominant services sector slowed to its weakest level in nearly three years last month, according to the ISM.

As a result of the escalation in US-China trade spat and weakness in US data, calls for another 25-basis point rate cut have increased further. Consequently, we have seen fresh falls for the Dollar Index and benchmark US government bond yields.

As far as the S&P 500 is concerned, well it is not looking too good at the moment. After breaking back below key levels such as 2959 and 2941, today it has broken another old support at 2915 – this level will now be the key resistance to watch on any short-term rebound. The S&P has also broken its bullish trend line in a further blow to the bulls. As things stand therefore, the path of least resistance is now to the downside and will remain that way until and unless we see a clear bullish reversal pattern emerge.

Source: Trading View and City Index. Please note this product may not be available to trade in all regions.


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.