5 Countries With Bear Market Tension

The global trade tension is getting heavier particularly on stock prices. A report by The Wall Street Journal further explained that equity indexes in selective countries economic growth that depending on export are being hard hit. The Standard & Poor’s 500 Index (S&P 500 Index) in the United States already endured 10% correction after reaching an all-time record high last September 21 in intraday trading. That results in different countries getting a bear market with 20% declines.

The five countries with more than 20% decline on indexes are the following:

  1. China

  2. Germany

  3. Italy

  4. Mexico

  5. South Korea

Similar to how an economic recession works, bear markets within stocks could spread around the globe. But the main concern here was the interconnected of the economic and financial system worldwide. The transmissions of these trade tensions are likely to infect the United States’s economy and securities markets.

The German  Index consisting of 30 major companies stocks has been slipping after reaching their close high during the month of January.

Harassed by the ascending concerns regarding trade constraints and the slowing economic growth worldwide. A researched data from FactSet Research Systems shown that components of German Indexes collectively gain 80% revenue from outside Germany, wherein a part of the S&P 500 collect 37% of their generated sales beyond the U.S. borders.

German auto businesses record about 7.7% of the country’s GDP according to Journal notes. Their auto industry is highly vulnerable and has the potential to limit export and obstruct their trade restrictions creating complex global supply chains. Limiting its potential growth provides negative ramifications for the rest of the German economy. At the same time, regarding President Trump’s imposed tariff from China, it has been a threat for a possible 25% levy for all imported vehicle and parts. All those devastating threats for German auto businesses lies on the U.S. principal market for the next quarters.

According to The Wall Street Journal reports, the U.S. companies and consumers have a hard time from the tariffs imposed, causing them to raise their selling prices. In October, the U.S. government collected an amount of more than $5 billion. A huge double-figure they’ve collected during the month of May. Now, other countries came with retaliation for a cited estimation by the Journal indicating that more than $1 billion tariffs paid to the U.S. exports during October. The strategy made the U.S goods less contentious against the foreign market.

Chief Technical Strategist at Macro Risk Advisors, John Kolovos, said in Barron’s report that the U.S. stock market is “moving in the wrong direction” and added that the “denial rally is over.”

Barron’s pointed that the values varying from the start of February low of 2, 581 to 2,633 have been mentioned being a critical support level to the S&P 500 according to professional technical analysts. When the former figure got to pass the downside, Kolovos speculates that the index can head down to 2,400. That means there’s a possible 18.4% decline to the all-time high during the month of September.

The biggest question now is, if the U.S. stocks dodge a possible bear market when China, Germany, and other large economy experience a bear market within their own stocks.

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