As key world leaders convened in Argentina at the end of last week, there was a noticeable dip in European stocks performance.
The meet-up led to the pan-European Stoxx 600 closing at about 0.25 percent lower than other sectors in the market. Most sectors have struggled to register gains due to the G-20 summit convention.
In the week that ended before the G-20 summit kicked off, the European index shed 0.92%.
The basic resources and auto sectors that were the most affected by the G-20 summit trade talks which commenced in Buenos Aires. Analysts believe that most of the investors will be paying special attention to what two key leaders, China’s President Xi Jinping and America’s President Donald Trump, discuss in their meeting.
In London, the FTSE 100 closed down business by a significant 0.97 percent decrement. Stock observers believe that the figure dipped because of the vast volume of mining stocks which lost value in that period.
At the Deutsche Bank, shares were traded at a considerably lower level, way below the flat line as they fell way below normal to 3.11 percent. The stock is expected to remain transfixed in this position due to the frequent police raids at Deutsche Bank’s headquarters. The police have pointed out that the HQ remains a focal point of interest due to a couple of money laundering allegations which have been leveled against the bank.
Tensions
Prior to the summit, President Trump went on record with mixed messages about America’s trade ties with China. He notified reporters last week on Thursday that the U.S. was on the verge of a collaboration with China. He also divulged that he remained unsure on whether to proceed with the deal.
Observers believe that the impasse was as a result of the war of words between the two nations. The conversation has largely been dominated by conversions about trade and tariff wars.
Top investors are still are sea about how the U.S.-China trade war will play out.
At present, the U.S. economy seems to be on the up thanks to fiscal policies while the Chinese economy is almost at a standstill. Ever since Trump declared tariffs in June adding up to about $50 billion in goods, several mainland China equities have taken a nosedive.
Keith Wade, a chief economist based at Schroders in London believes that things will only get harder for Trump going forward. This is because China seems to be unwilling to play into America’s hands and give up any intellectual property. Wade mentioned that he expects the tariffs to decline by about 10-15% with several products being affected. Once that happens, Wade mentioned that the most likely scenario would be a down time in corporate investment and growth.
One of the contentious issues expected to stir up debate during the G-20 summit is the nature of the Brexit deal. There are still concerns about the role the U.K. will play in the EU’s politics in the days to come. Before the summit kicked off, Theresa May, who happens to be the U.K.’s prime minister, addressed reporters and shared that she was focussed on winning the hearts of lawmakers this December.
She mentioned that the timing is significant in that the parliamentary vote is set to occur at about the same time. She opined that reading from the same script would be the best case scenario instead of dwelling on an alternative Brexit deal.
Keeping Tabs
Unsurprisingly, other European investors are keeping tabs on how the entire G-20 summit plays out. In Italy, Giuseppe Conte, the Prime Minister shared with a local newspaper that plans were currently underway to lower the planned deficit goal by a considerable margin in 2019.
Ideally, the PM aims to bridge the differences that exist with the European Commission.
In so doing, he remains hopeful that that will put a stop to the constant monitoring by Brussels officials. Notably, the Italian stock market was at a significantly lower point during the early stages of the deals.
At the G-20 summit, world leaders are likely going to pontificate over the same age-old issues like sustainable economics and food security. While that will be the main agenda, all eyes are going to be transfixed on the U.S.-China exchange.
Wall Street traders have been quick to point out that they were not willing to wait and see just how everything pans out. They expect that either a truce will be agreed upon where no new tariffs exist or the U.S. stock market sells out big time in December. All the same, most agree that if the situation remains unchanged all through December, China’s A-shares have a very good probability of fairing worse.
