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25-6-2019 18:24:59

Global stocks will sink into a bear market if trade tensions escalate, UBS predicts

Trade tensions raging on unabated will likely push global stocks into a bear market, UBS predicts. President Donald Trump and the Chinese President Xi Jinping’s meeting at the G20 summit this week to discuss trade matters comes as US stocks trade near their all-time highs. Visit Markets Insider’s homepage for more stories. Should the trade war between the US and China continue without a resolution, or see an escalation, global stock markets will likely fall into a bear market, UBS said. “Continued trade tensions will likely see global equities down roughly 20% from current levels,” a team of strategists and economists led by Arend Kapteyn wrote in a Monday report. US markets – now trading within striking distance of a record high even amid global trade uncertainty – would likely underperform the rest of the world to a more severe degree than history would suggest, the firm said.Foto: UBS forecasts across asset classes.sourceUBS. Emerging market equities would likely suffer most, including their foreign exchange-related challenges, UBS wrote. Within emerging markets, Chinese equities would “hold up better” relative to others due to their domestic nature. “In global sectors, materials stands out as most vulnerable, but some defensive and crowded segments are also at risk amidst weaker growth,” the firm said, adding the chance of an all-out escalation is not its base case.A bonus just for you: Click here to claim 30 days of access to Business Insider PRIME This assessment comes just ahead of President Donald Trump and Chinese President Xi Jinping’s meeting later this week at the G20 summit in Osaka, Japan. Wall Street is broadly tempering their expectations for any kind of significant trade deal to emerge from the highly anticipated meeting. More broadly, investors have not properly priced in this prospect of a trade war escalation, UBS said. The firm’s monitor shows the market is “just about half way between complacency and peak fear levels of last year.”Now read more markets coverage from Markets Insider and Business Insider: Wall Street is setting rock-bottom expectations for Trump and Xi’s G20 meeting – but the stakes are sky-high Both stock and bond markets are predicting rate cuts this year – but some industry watchers aren’t sure the Fed should play ball The Fed just quietly acknowledged that it made a policy blunder last year – and escalated the stakes for investors as the next recession loomsThe post Global stocks will sink into a bear market if trade tensions escalate, UBS predicts appeared first on Business Insider Nederland.
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