Markets roiled by geopolitics – Asia Times

Financial markets slid on escalating Sino-US tensions as Beijing ordered the closure of the US consulate in Chengdu in retaliation for the closing of the Chinese consulate in Houston, ordered by Washington last Tuesday.

Hostilities are unlikely to calm down any time soon as US Secretary of State Mike Pompeo criticised China in a speech prior to China’s decision.

“Given elections loom in the US in November, it is extremely unlikely that the relationship will return to a positive path before then,” Everbright Sun Hung Kai analysts said in a research note.

“Certainly the rhetoric will be heated and further disputes are likely to flare up. Both Democrats and Republicans are playing up their credentials as being tough on China.”

Analysts are worried this may spill into trade with the Phase-1 US-China trade deal under threat. This comes at a time when economic recovery is stuttering.

“Concerns over the economic recovery in the US are weighing on risk sentiment,” said Fiona Cincotta, a market analyst at forex broker City Index.

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