Closing post
Time to wrap up…
The US-China trade war has continued to bubble away, worrying investors and economists.
The day began with the news that US treasury secretary Scott Bessent had accused China of trying to hurt the world’s economy, following its recent clampdown on rare earth exports.
“This is a sign of how weak their economy is, and they want to pull everybody else down with them. Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world.
If they want to slow down the global economy, they will be hurt the most.”
China struck a slightly more conciliatory tone; its Ministry of Commerce has urged the US to work with Beijing.
A spokesperson for the ministry said today:
“The U.S. side cannot seek talks on one hand while threatening to introduce new restrictive measures on the other. This is not the right way to get along with China.
“China’s position concerning tariff or trade wars has been consistent -- if forced to fight, China will fight to the end, and for talks, the door is open.
China and the US began charging additional port fees on ocean shipping firms today too.
The International Monetary Fund has said the global economy has shown “unexpected resilience” in the face of Donald Trump’s tariffs, as it lifted its forecasts for world growth in 2025 and 2026.
The IMF also said:
The UK will have higher inflation than other advanced economies in 2025 and 2026…
…meaning the Bank of England should be careful about lowering interest rates
It has concerns about the boom in technology valuations
It believes US stock markets which have rallied during the AI boom are at risk of a “sudden, sharp correction” while government bond markets are under mounting pressure.
Elsewhere….
He told an event at Cambridge there is an increased danger of:
….a downside scenario, where inflation undershoots, and goes below target in late 2026, and the economy moves into a weakened state for a sustained period, with output and employment below potential, leading to undue damage to economic activity.
JP Morgan CEO Jamie Dimon has hinted there may be further private credit losses following the collapse of subprime lender Tricolor and auto parts supplier First Brands.
Profits have jumped at JP Morgan, and at Goldman Sachs.
US shares risk ‘sharp correction’ but markets seem complacent, IMF warns
US stock markets which have rallied during the AI boom are at risk of a “sudden, sharp correction” while government bond markets are under mounting pressure, the International Monetary Fund has warned.
In its Global Financial Stability Report, just published as policymakers gather in Washington for the IMF’s annual meetings, the Fund said that markets appear “complacent”.
It highlighted “increasing vulnerabilities in the financial system,” including in stock and bond markets, and among “non-bank financial intermediaries” (NBFIs) or “shadow banks”, which it warned are now closely bound to the banking sector.
US stock markets have repeatedly roared to record highs in recent months. The IMF said stocks do not appear as overvalued as they did during the dotcom bubble at the turn of the millennium. But it said the gains are worryingly concentrated among the “magnificent seven” tech firms, which include Apple, Nvidia and Meta.
“Concentration risk within the S&P 500 is at a historic high, with a narrow group of stocks spanning mega-cap IT and AI-related firms driving the broader index,” it said, adding that the magnificent seven account for 33% of the index.
More here:
(a timely warning, as Wall Street slides today….)
