Well its been coming right? Markets have been ignoring the macro tensions but the reality is that deep down, we all knew China wasn’t going to stay quiet for long. The US had been threatening China for many days now and China retaliated with the same stone (they ordered the US to close their consulate in Chengdu). Asia traded lower as a result (Hang Seng closed down 2.2% on high vols – +34% vs 20d AVAT) and European equities didn’t have any other choice other than to follow. All indices and sectors are down at least 1.2% (Oil & Gas the only exception up until recently – helped by Equinor’s messy Q2 beat, EQNR NO +4.5%) and we are seeing some conviction to the move with higher volumes across the board. Note the Stoxx 600 is heading for its first weekly decline in four (down -1.3% vs last Friday’s close) and somehow disappointing, the DAX is back trading below its psychological breakout point of 13000 (next support 12000, then11600).
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