Retaliatory Tariffs All Around | Flow Traders Investment Competition | Week 30

This week, the Dow Jones Industrial Average took the biggest hit, losing 3.29%. S&P 500 and NASDAQ both lost 2.75% and 2.9% respectively. Euro stoxx 50 took a 2% hit, and the VIX increased by 17.1%.

Since president Donald Trump announced that the U.S. will impose a 5% tariff on goods imported from Mexico, starting the tenth of June, both the U.S. economy, as well as the Chinese government have reacted fiercely to Trump’s decision. Shares of the largest US automakers dropped in trading Friday, with Fiat Chrysler dropping 5.8%, and General Motors being down 4.3%. Reason for this is the fact that most American automakers have major production located in Mexico, with the above-named companies importing as much as 29 and 24 percent respectively, and thus Trump’s policy will threaten tens of thousands of American jobs. Additionally, the US 10-year yield collapsed to 2.13%, due to worries about a potential recession. Lastly, Chinese buyers of U.S. state grain have stopped ordering, and don’t expect to resume the purchases, this obviously as a reaction to Trump blacklisting the Chinese telecom giant Huawei. American soybean farmers have taken a hard hit from the trade tensions, and the government announced a 16-billion-dollar aid program for those impacted by the retaliatory tariffs.

In Europe, Portugal’s Minister of Finance Mario Centeno announced the issuance of the so-called “Panda” bonds, bonds issued in the Chinese yuan. This makes Portugal the first eurozone country to issue bonds denominated in the Chinese yuan. Minister Centeno intends to sell 2 billion yuan, the equivalent of 289 billion dollars, worth of bonds with a maturity of three years. In Italy, the central bank has warned the anti-establishment government for the risks of higher spending, and thus widening the country’s deficit, yet the government persists on increasing spending to boost the Italian economy.

For the Flow Traders Investment Competition, Merx lost on their Alibaba turbo, as well as their investments in Turtle Beach and RCI Hospitality Holdings, which resulted in them moving down 3 places. Liquid gold loses on Coca Cola and their EUR/TRY turbo long, staying on 27th place. Fides Investments climbs 3 places, making them tenth place, thanks to the India ETF. Phoenix gains on NASDAQ 100 and FTSE 100 ETFs, and climbs 3 places, ending up in the 14th spot.

Moving on to the B&R Beurs Investment Competition, Heeren XIII took the number one spot in the competition. Basura lost on World Health Care, World Tech and Timber & Forestry ETFs, keeping them locked in 4th place.

Written by Sebastian Cornielje

B&R Beurs Investment Competition