11 July 2018Reading time: 2 minutes

Early this year we wrote about how the ongoing advance of the Nasdaq-100 seems inevitable. There seems to be a undiminished optimism regarding the technology stock market and a majority of the analysts counted on an increase. Since then the index has indeed risen, although this was accompanied by several corrections. Compared to the start of this year, the Nasdaq-100 is now 7,7 percent higher.

It remains to be seen how the American economy will develop itself in de coming period. In general it is expected that the economy of America will grow faster than in Europe and China. However, a possible risk factor could be the ascending worldwide trade conflict and the effects that this might have on the American economy. On July 6th, the American president Donald Trump has implemented new import tariffs for Chinese products. This concerns a total import value of 34 billion dollar. As a counter-reaction the Chinese government has implemented comparable import measurements for American products. It remains to be seen if Trump will respond on this by introducing additional new import tariffs.

The current import tariffs could have a negative impact on technology stocks. Most chip manufacturers and other technology companies such as Apple, have based a part of their production outside of the US. The import tariffs may also lead to job loss in the United States.

Arthur Laffer, Donald Trump’s former economic advisor during the election campaign, recently claimed to Bloomberg Television that the worldwide trade war could be a danger for the economic stimulus policy of Trump. Therefore Laffer doesn’t expect that a trade war eventually will happen. Early July the Federal Reserve claimed that the negative risks for the American economy as a result of the import tariffs have intensified during the past month. Despite that, the central bank still expects to raise the interest rates gradually.

The future price of the index is subject to several political, industrial and sector specific as well as economic factors. Investors should consider such risk when making their investment decisions. Developments can be different at any time than investors expect, which can result in capital losses.

Vontobel products on the Nasdaq-100 are tradable at DEGIRO.

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21/09/2019 19:39:25