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Market sell-off not down to trade war fears

The perception that markets have been increasingly shrugging off trade war fears is well founded, even against the backdrop of last week’s sell-off. Based on our analysis of 70 trade war news events over the past two years, we find: (i) a clear decline in the impact of negative news on global equities; (ii) rapid reversals of equity losses that do arise; (iii) a stark contrast between the reaction of US and Chinese markets; and (iv) minimal effects on bonds and many other key assets.

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