Weekly Overview (30 July – 03 August 2018): Trade War escalates as China rolls out tariffs on $600 billion in US goods

Fencer dressed in black poses menacingly

China’s answer to Trump’s large-scale embargo is here, and it bodes nothing good for the citizens of the US. In the words of China’s Ministry of Commerce, import taxes on select US goods are expected to range in rates between 5% to 25%.

The tariffs are poised to hit a large number of agricultural products, with some focusing on a selection of metals and chemicals. In the release, the Chinese government also stated the following:

“The implementation date of the taxation measures will be subject to the actions of the US, and China reserves the right to continue to introduce other countermeasures.

It then continued with an unambivalent warning: “Any unilateral threat or blackmail will only lead to intensification of conflicts and damage to the interests of all parties.”

The unemployment rate in the US declined to 3.9%, according to a report from the US Bureau of Labor Statistics. Employment mostly rose in the professional and business services sector, as well as in manufacturing, healthcare, and social assistance.

On August 1, the Monetary Policy Committee in the UK voted unanimously to raise the Bank Rate by 0.25%, reaching a total of 0.75%. In doing so, the Bank of England edged one step forward towards its 2% inflation target in an effort to bring sustained growth and employment in the country.

Canada’s month-over-month GDP report for June 29 revealed an increase of 0.1%, beating Wall Street consensus of 0%.

On July 31, Bank of Japan made a slight correction to its monetary policy while still chasing its 10 year yield target of about zero. This target is something the BoJ is striving to maintain as it would allow stagnant banks to generate better profits, as well as stimulate lending.

On Thursday, GoPro reported second quarter losses per share of 15 cents and revenue of $282,7 million, beating Thomson Reuters consensus estimates of 15 cents loss per share and $270.2 in revenue. Despite crushing analysts’ expectations, the company’s reported revenue was actually 4.7% less than what it reported in 2017.

The popular insurance company Allianz posted 5% fall in profits (€1.89 billion) compared to the €1.99 reported a year earlier. Diluted earnings per share also suffered a decline of 1.5% at €4.38. Despite this, the company’s outlook for the year remains positive, with Allianz aiming to conclude a new share buy-back program by the end of September that could potentially reach €1 billion.

Last week, Tesla’s shares declined by $3,06, exceeding Wall Street loss projections of $2.92 per share by a fair margin. However, the automaker posted better-than-expected revenue and has a positive outlook for the second half of 2018, expecting to report better profitability on a GAAP basis.

Apple came strong with a quarterly profit of $2.34 per share, beating Wall Street consensus of $2.18 per share. The company also gave an even better revenue projection following strong sales of its iPhone X smartphone.

Earnings of 15 cents per share less than in the previous quarter—that is what read on the earnings statement released by Pandora Media. The number came 1 cent short of meeting Wall Street expectations. The streaming music service, however, reported higher-than-expected revenue, and boasted with a subscriber count of about 6 million.

AMC Entertainment posted earnings of 17 cents per share for its latest quarter, which is more than double the amount reported for the previous quarter. Revenue also beat analysts’ expectations in the wake of record ticket, food, and beverage sales.

On Friday, the NASDAQ closed at 7,395.49, the S&P 500 closed at 2,840.35, and Dow Jones closed at 25,462.58.

The US dollar sustained its significant growth versus its major counterparts. The EUR/USD pair is traded at 1.1583, while the USD/JPY pair reached a 24-hour low of 111.31 last week, with the pair trading at 111.63 on Friday.

The Canadian dollar slid against the Greenback due to added trade tension between the two countries. Last week, the looney touched intraday lows at the 0.7669 level versus the US dollar.

The GBP opened at 1.3017 against the Greenback on Monday, struggling to find solid ground throughout the entire day. Overall, the currency was down 0.8% against the USD and 0.4% against the Euro.

On Friday, gold traded at 1213.47 (down from 1223.07 from the preceding Friday), while silver traded at 15.371 (down from 15.439 from the preceding Friday).

Make sure to visit our detailed trading news report to catch up on all important financial events from last week.