The Ibex continues to fall as China and the US face-off

The European stock markets fell this Monday (Ibex: -0.7%) while the tensions between the US and China continue to be in focus. Yesterday afternoon, after Europe closed, it was learned that the United States has tightened its restrictions on the Chinese telephone company Huawei. This comes on the back of lack of evolution on the trade agreement which was set to be reviewed over the weekend -as it was planned- and, in addition, no date for future meetings was established between both sides.

Wall Street ended last session with a mixed sign, with moderate falls in the Dow and rises in the S&P and, more prominent (+ 1%) in the Nasdaq. Asia has also experienced an uneven day of moderate movements.

"The Trump administration fears that Huawei is essentially an arm of China's ruling communist party," said David Madden, an analyst at CMC Markets in London.

On the other hand, this Monday it emerged that Mike Meadows, White House Chief of Staff, has not spoken with Nancy Pelosi - the Speaker of the House of Representatives -, so there is little hope that a package to alleviate the effects of the coronavirus is negotiated soon. For the moment, the discussion about the US postal service seems to have taken center stage. The service is experiencing delays as it needs a capital injection, which is where the government could come into play. "There are some concerns that the Trump administration wants to keep the service running at a slow pace, so it will not be in a position to handle a large wave of votes by mail in the November presidential elections," they explain from CMC Markets.

These analysts also acknowledge that, in the light of renewed health concerns and concerns that tougher restrictions will be reintroduced due to the outbreaks of Covid-19, hopes of a healthy recovery are fading. The New York Federal Reserve manufacturing report on Monday fueled this idea. The August update was 3.7 compared to the forecast of 15 by economists. The July reading was 17.2.

As for the agenda on Tuesday, investors will be awaiting the restart of the talks between the United Kingdom and the European Union for Brexit. In addition, the vice president of the ECB, Luis de Guindos, and the governor of the Fed, Lael Brainard will speak. Investors will also attend to the latest US building permit reports for July.