Highlights

  • The trade deal -- even if temporary -- should support economic growth in both countries.

  • For the relief rally to continue, more clarity on trade policies is needed from both sides.

  • We think uncertainty will remain high and investors should maintain a global approach.

In this edition

The United States and China agreed to reduce trade tariffs substantially after their negotiations. The headline tariffs on Chinese exports to the United States have been reduced from 145% to 30%. The United States cut significantly ‘reciprocal tariffs’ introduced in April and decided for a 90- day truce on some of the remaining ones. China responded with its own cuts on duties on US exports to the country. This truce prompted a relief rally across multiple asset classes, with the S&P 500 index now above Liberation Day level and only around 3.5% lower than its all-time high hit in February. This is positive for economic activity in both countries, but uncertainty remains on future negotiations. In addition, we should wait and see what happens after the truce ends in mid-August. Hence, we stay vigilant on more policy decisions in the coming weeks.
 

S&P 500 showed strength, but more clarity is needed

Key dates

19 May

EZ CPI (final), China retail sales

 

 

21 May

Japan trade balance, UK CPI, South Africa CPI  

 

22 May

PMI – EZ; UK; India, Chicago Fed National Activity, Mexico GDP

*Diversification does not guarantee a profit or protect against a loss.

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