In October 2019, a new front of the trade war is expected to open, which the United States initiated by imposing tariffs on Chinese products. Now they are to join European products on a large scale. The trade war is spreading wider and wider, which could plunge the European economy even further, which is still not in the best condition right now.
It is worth reminding that the entire dispute between the USA and Europe has been going on for many years and it concerns accusations of illegal state aid to the European group Airbus, which was to hit the interests of American Boeing. The parties accused each other of illegal subsidies that were ultimately intended to increase competitiveness and market share. As it concerns the aviation market, the matter involving huge money, which according to President Donald Trump Boeing lost because Airbus was illegally subsidized. Yesterday it was confirmed by the World Trade Organization (WTO), so for illegal subsidies and losses of the US concern, the United States got the green light to impose tariffs on European products worth USD 7.5 billion.
As a result, from October 18, 25 percent tariffs are to be imposed on hundreds of industrial and agricultural products from the EU. Customs duties are directed mainly at products originating from countries that are responsible for subsidies for Airbus, i.e. from Germany, France, Spain and Great Britain. In addition, tariffs of 10 percent were imposed on aircraft coming from the EU, but the automotive market has been spared, which is the most important for Europe's largest economy, namely Germany.
The market's reaction to the expanding trade war was immediate - strong declines in share prices and, as a result, stock indices from the US to Europe and Asia. The German DAX index has not had such a weak session as yesterday.
German DAX (DE30 CFD) daily chart. Conotoxia trading platform
From the chart perspective, DAX has stopped under the downward trend line, which effectively stopped the previous rally. It seems that only breaking it could lead to greater increases. Meanwhile, for the current decline, the target may be a 200-session average and the level of the next support in the region of 11280 points.
Daniel Kostecki, Chief Analyst of Conotoxia Ltd., a company from the group to which Cinkciarz.pl Sp. z o.o. belongs
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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