JPMorgan Says Markets Have Yet to See Full Impact of Trade War

(Bloomberg) -- A long-simmering U.S.-China trade war that hammered stocks from both nations last month may inflict still more pain on markets.

While the Shanghai Composite Index tumbled 8.2%, the worst month since October, and the S&P 500 Index dropped 6.6%, the price swings don’t account for weakening economic data, according to John Normand, head of cross-asset fundamental strategy at JPMorgan Chase & Co. in London. Manufacturing figures from May show weakness across Asia and Europe, underscoring the global ramifications of the clash between Washington and Beijing.

“The move down in markets over the past month is all about the trade war, but I don’t think this is fully in the price,” Normand said on Bloomberg TV. “The economic data were weakening before tariffs went up so we’ve yet to see the economic consequences of trade.”

U.S. President Donald Trump’s tariff moves against Beijing last month spurred the biggest selloff in emerging-market equities since October. Meantime, 21 of 24 developing-world currencies lost ground, led by declines from Chile to Colombia, Mexico and China. Traders have sought a haven in the U.S. dollar, which is hovering near a five-month high versus a basket of global currencies.

Trump opened another front in the trade war last week, threatening to impose tariffs on imports from Mexico unless the Latin American nation takes unspecified steps to stem an influx of migrants. Trump said on May 30 he’d place an initial 5% levy on Mexican goods, with tariffs rising each month -- to as much as 25% by October -- if the nation doesn’t halt the flow of undocumented migrants to the U.S.

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