Trade wars are back in the news and, once again, it is industrials that get hit, falling 1.61% yesterday, nearly double the dip in the S&P 500 (-0.86%). It is impossible to know how far President Trump will push against the Eurozone. But if trade deficits are anything to go by, there is plenty of scope for this dispute to escalate.
Indeed, the French Government may wish to revisit its decision to block EU enlargement. Under attack from the US, and Russia (interference in the Western Balkans), the EU is ‘isolated’. The UK is leaving too. Agreeing to the accession of Albania and North Macedonia could kick-start an expansion of the EU, reasserting the values and principles of the beleaguered single market.
It is worth keeping in mind one important lesson from 2019. Whatever happens over the next weeks and months, trade fights will not derail the important evolution of tech – both in the US and the Eurozone.
The US information technology index (S&P 500) has still risen 39.80% this year. Flush with high returns, US investors will continue their push into Europe, seeking out start-ups, and cultivating new ecosystems that will help to drive unemployment down. Trade wars matter, but they have not stopped stock markets rising in 2019.
