<p>On Monday, the S&amp;P 500 Index drop 1.37% on concerns around trade war. It broke the trend line from March Low.</p><p> </p><p>US equities are spooked by the prospects of a deepening trade war. Earlier this month, the recent G7 Summit at Canada displayed signs of tensions between the US and other major industrial nations. US President Trump left the summit earlier and pulled US support from the joint statement. He further accused Canadian Prime Minster Trudeau of being weak and dishonest.</p><p> </p><p>Yesterday, Wall Street Journal reported Chinese President Xi Jinping told CEOs that he could retaliate against the US on trade. China could “punch back” instead of turning the other check if somebody hits you on the left cheek.</p><p> </p><p>As the US equities corrected heavily, US Trade Advisor Navarro came out to comment that the market declines are “an overreaction” and that investment restrictions are not as sweeping as markets are anticipating. This resulted in the S&amp;P 500 Index to rebound from the low. His remarks are similar to the earlier tweets by Treasury Secretary Mnuchin that the Treasury’s report coming Friday are not directed to any specific country.</p><p> </p><p>As the trade war continues to escalate, below are the upcoming key dates to watch out.</p><ul><li>June 30: Announcement on restrictions on Chinese investment in the US.</li><li>July 6: Implementation on US$34bn import tariffs</li><li>August: US$16bn import tariffs</li><li>September: US$200bn import tariffs</li><li>By November: Auto import tariffs</li></ul><p> </p><p>US President Trump wants to fulfil his election promise to his voters on his “America First” doctrine. He is focused on putting the American interest above the rest of the world, and helping the American workers affected by heavily-subsided Chinese imports. He believe such a move could help him to perform well in the November midterm elections.</p><p> </p><p>Thus, we expect trade tensions to remain till the US midterm elections on November. Further escalation of trade war could deepen the correction in the US equities.</p><p> </p><p><b>Edmund Chan, CFA</b></p>