(09 MAY 2019)DAILY MARKET BRIEF 1:Risk appetite remains low as tariffs loom

Equity futures erased yesterday gains after President Trump did toughen its language on China, saying that China “broke the deal” the two countries have been working on for months. S&P 500 futures resumed downtrend and are currently testing the 2,862 support, which correspond to the low from Tuesday as well as its 50-day moving average. Across the Atlantic, the sentiment is not much better with the German DAX sliding another 0.65% to 12,100 points. The SMI gave up 1% as it reached 9,520 points.

In the FX market, investors fled risky currencies and bought safe-haven ones such as the Japanese yen - up 0.40% against the greenback with USD/JPY testing the 109.57 support (low from February 6th) - while the Swiss franc added 0.22% against the buck. USD/CHF erased yesterday gains as it slid toward 1.0180.

The single currency quickly fell to 1.1175 before climbing its way back toward 1.1190 as the risk sentiment stabilise. It has been a nerve-wracking week for investors as Trump kicked in the hornets’ nest last Sunday as he expressed his frustration with the negotiation process. We believe that strained market conditions will prevail for the rest of the week, as Chinese negotiators are expected to land in Washington on Friday.