Markets rise but trade war could “get out of hand”

Markets rose on Tuesday.

The S&P 500 rose 0.4 percent, the STOXX Europe 600 rose 0.4 percent and the Nikkei 225 rose 0.7 percent.

“In the absence of bad news, we drift higher because that is what our bias has been,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital.

“With the prospect of a positive earnings season ahead of us, investors seem to have forgotten the threat of further trade tensions,” said Konstantinos Anthis, head of research at ADS Securities.

Kate Warne, investment strategist at Edward Jones, suggested that trade worries will be on the back burner “until a bit later in the year”.

In the meantime, Warne said that “global growth might still be alive” and that the trade tariffs announced so far are unlikely to have a significant impact, although she acknowledged that a cycle of tariffs and retaliatory tariffs is a concern.

But a cycle of tariffs and retaliation may already have started.

Just days after the US and China imposed tit-for-tat tariffs on each other's goods, the US on Tuesday released a list of 10 percent tariffs on $200 billion in Chinese goods.

David Stockman, the budget director during the Ronald Reagan administration, told CNBC that the US is heading for a “massive trade war” that will “get out of hand”.