Smooth central bank communication ensured trading was calmer than in previous weeks. The Fed and the ECB provided investors with some visibility.
In another week dominated by European political developments, Pedro Sanchez finally managed to form a Spanish government and Madrid rose on the news.
Equity, bond and currency markets had a trying week.
China and the US confirmed that they wanted to end the escalation in tariff threats and work towards a more comprehensive agreement.
We decided to take some tactical profits and halved our equity overweight by reducing exposure to Europe and Japan.
Global stock markets continued higher despite the US decision to withdraw from the Iran nuclear agreement. Looking beyond the positive impact of higher oil prices on oil and cyclical sectors, US inflation for April also helped stimulate market rises, especially in the US and Asia by coming in at +0.2% instead of the...
After April’s strong bounce, markets edged lower in the first week of May. Economic data continued to suggest the economy was slowing both in Europe and the US, a big contrast with the surge seen at the end of 2017.
The last 20 years have seen serious upheavals in Europe’s financial markets and portfolio construction.
After weeks of investors focusing on US-China trade tensions, markets are gradually returning to fundamentals, prompted by upbeat quarterly earnings and persistently good growth in both the US and Europe.
Geopolitical risk threatened at the start of the week due to air strikes on Syrian facilities, but markets were largely unaffected when tension failed to escalate, especially with Russia.
Equity markets generally trended higher over the period. Moves were influenced more by sentiment on US-China talks on freeing up markets and protectionist worries than by interest rate or economic cycle considerations.
Financial markets were very choppy in line with the war of words between the US and China. Beijing started the week with tit-for-tat retaliation, imposing 25% in tariffs on $50bn of US exports. The big difference was that the products targeted are made in pro-Donald Trump areas.
Equity market trading was erratic over the week. On the one hand, investors were reassured by this weekend’s start to talks between China and the US. China is moving towards significant concessions, opening up its domestic market and companies and striving to buy more US goods. But on the other, US tech stocks fell...
The first press conference by the new Fed chairman, Jerome Powell, went down relatively well with markets. As expected, he raised the benchmark rate by 25bp and said the US economy was healthy enough to warrant two further rate hikes in 2018.
Global economic data was still generally upbeat but the White House’s protectionist rhetoric hogged the limelight. US economic data is no longer surging, and the recent retail sales figure is a good example, but growth and inflation trends remain encouraging.
Markets took a breather despite a busy week for political developments and news that was theoretically adverse
This week's focus was on new Fed chairman Jerome Powell's first Congressional appearance. He sounded a note of optimism on the US economy, thereby rekindling talk of a fourth rate hike this year.
The markets are guilty of overconfidence in a supportive economic environment and seem to be paying little heed to political risk in Italy and Germany.
Trading remained erratic with no major underlying trend.
This week's catalyst was January’s CPI in the US. Following a larger-than-expected increase in wages in the previous week, all eyes were on CPI due to mounting concerns that inflation might get out of hand and push long term bond yields higher.