Investors already have more than enough on their plate. Now they find themselves having to make room for one more worry, as tensions build between the US and China.
After several trade spats during the Trump administration, things had largely calmed down under his successor. But Nancy Pelosi’s visit to Taiwan to see the president there has been met with stern warnings from Beijing.
“So far the response has been to hold military drills and step up sanctions on a country it regards as a breakaway province. However, a sell-off on Wall Street suggested there is concern about an escalation,” says AJ Bell investment director Russ Mould.
“Asian stocks had a more measured response, but the FTSE 100 was lower on Wednesday morning. It still feels like markets are on something of a precipice, with an inconclusive earnings season not providing the catalyst for either major gains or significant losses just yet.
“Oil was flat ahead of an OPEC meeting where the cartel is widely expected to agree to either increase output slightly in September or maintain it. Crude has dropped sharply from its recent highs, with an economic slowdown expected to hit demand.
“Given OPEC has been struggling to hit production targets anyway, traders may treat whatever comes out of its latest summit with some scepticism.”
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