US and European stocks rise but buying the dip likely to be “a losing proposition”

Markets were mixed on Tuesday.

The S&P 500 jumped 1.5 percent and the STOXX Europe 600 rose 0.5 percent.

However, Asian stocks fell. The Hang Seng plunged 2.1 percent amid escalating anti-government protests while the Nikkei 225 fell 1.1 percent.

US and European stocks rose after the US government backed off on imposing tariffs on some Chinese imports from 1 September.

However, some analysts remain cautious.

Andrew Hunter, senior US economist at Capital Economics, said that the US decision to delay some of the China tariffs was “obviously designed to avoid a politically-damaging rise in consumer prices ahead of the holiday season” and “should not be misinterpreted as a sign that trade tensions are easing”.

Meanwhile, Fiona Cincotta, senior market analyst at City Index, said that the protests in Hong Kong “are adding to an already tense geopolitical picture amid ongoing U.S.-Sino trade tensions”.

In Europe, the ZEW indicator of German economic sentiment fell to -44.1 in August, down from -24.5 in July and marking the lowest reading since December 2011.

And with purchasing managers indices already having fallen to the low 50s, UBS strategists Francois Trahan and Samuel Blackman said that buying the dip in stocks is likely to be “a losing proposition”.