Global stocks tumbled on Tuesday as the trade war between China and the United States escalates further and the British pound weakened amidst political uncertainty in Brexit.
The British pound dropped to its lowest since 2017 as Boris Johnson, British Prime Minister, attempted to hinder the progress of lawmakers in order to prevent a no-deal.
The most recent escalation in the trade war between the US and China has been the imposition of 15 per cent tariffs on a range of Chinese goods. As a response to the new tariffs, China too imposed duties on US crude oil being imported to China.
While President Donald Trump said that both parties will sit together for a discussion on the situation, the trade tensions between the two nations do not seem to subside.
On Monday, the Chinese Commerce Ministry said that it had filed a complaint against the United States at the World Trade Organisation as the latest tariffs went against the agreement reached by the two sides in a meeting in Osaka. The industrial sector of China has been affected by the trade war as many are being influenced by the tariffs as well as the weakening yuan.
Senior strategist at Sumitomo Mitsui Trust Asset Management, Hiroyuki Ueno, said in a statement that there is little hope that the trade war between the two nations will end. However, he added that stock prices will not fall too steeply if the US economy stays strong.
Major investors are waiting for the manufacturing survey of the Institute for Supply Management (ISM) which would be out on Tuesday. The ISM index has remained over 50 even though the manufacturing sector of the United States seems to slow down.
The British pound dropped 0.58 per cent in the currency market. Prime Minister Johnson said implicitly on Monday that he would go for an election on October 14 if the lawmakers prevent him from pursuing no-deal Brexit.