China's imposition of a broad array of tariffs in response to US trade threats has triggered a decline in risk assets, including crude oil, cryptocurrencies, and the Euro. The tariffs are expected to reduce economic activity and trade volumes, leading investors to shy away from riskier assets. Crude oil prices are particularly affected, as China's significant role as a global consumer implies reduced demand. The uncertainty surrounding the trade confrontation between the two major economies has also led to a decline in cryptocurrencies, which have become a barometer for risk sentiment.
The broader market impact remains uncertain, with investors still anticipating a potential compromise between the US and China. However, the immediate reaction has been a flight to safety, with the US dollar strengthening as investors seek its safety and liquidity. As of 00:41 on February 4, crude oil futures (CL1) are trading at $72.12, down from the last close of $73.16, reflecting the market's cautious stance amid the ongoing trade tensions.