Flow Traders Investment Competition: Trump’s Trade Tirade Continues

Global stock markets had a week of mixed performance. In Europe, political uncertainties from Italy’s election remain a source of worry for investors. The Euro Stoxx 50 index of the fifty largest Eurozone companies closed the week down -0.58%, while the Netherlands’ AEX index closed -0.45% lower. On the other side of the pond, however, the week was much brighter despite Trump not resisting the urge to turn to his Twitter account. The S&P 500 finished the week up +1.46% in its first consecutive three-week gain since January of this year. The price-weighted Dow Jones index did even better, up +2.35% for the week. Overall, global markets edged +0.14% higher by Friday’s close as recent tensions could not dampen a generally solid investor sentiment in the world economy.

In the U.S., the week was marked by the re-emergence of trade war fears ahead of Friday’s G7 meeting in Canada. However, this time the fears are of escalating tariffs between the U.S. and Canada, as well as its European allies France and Germany. Another classic Trump Twitter tirade saw Canada’s Prime Minister Justin Trudeau and French President Emmanuel Macron accused of imposing “massive” tariffs on U.S. exports. These are likely in retaliation for Trump’s tariffs on foreign aluminium and steel entering the country to protect local industries. Nevertheless, investors are unsettled by the uncertainty of how the matter will be dealt with during the meeting and whether threats will turn into realities. In other news, Facebook is once again in the headlines for another breach of security. From the 18th till the 27th of May, a bug in the social media site accidentally set 14 million users’ sharing settings to public. This made these users’ shared content openly available, despite them not knowing about it. In the meantime, Facebook has fixed the bug and informed those affected.

Naturally, Trump’s shenanigans have spread to the other side of the pond as well. On Friday, France’s finance minister Bruno Le Maire announced the country’s support for Germany’s stance against the recent U.S. trade policies. Germany currently maintains a positive trade balance with the U.S. and a current account surplus of 8%, compared to the U.S.’ 2.5% current account deficit. Many speculate that Trump will impose tariffs on German car exports, a move estimated by Belgian think-tank Breugel to cost over €17 billion a year.

It has been another good week for the Investment Groups with the vast majority generating positive returns. This week’s risers are Conquistadores and K2 Capital, having both gained five places in the competition. Conquistadores continues to reap the benefits of its Butterfly option strategy on a European stock index. For K2 Capital, meanwhile, their gamble in Chinese streaming platform iQiyi is paying off and the group achieved the highest return of all Investment Groups for the week (+2.22%). However, not all groups are doing so well. Batavia Investments made the biggest loss of the week (-1.22%) due to its corporate bonds in Portuguese football club Sporting CP and the Canadian Russel Metals. The end of the competition in sight, but it’s not over yet!

Written by Jasper Thouin