There’s no loss of appetite for risk assets right now as financial markets work through their issues.
There’s at least a temporary fix for the ‘Italian problem’, the North Korea summit could end nuclear fears on the peninsula and there’s growing optimism that China will do enough to put its spat with the US to bed.
Trump isn’t about to go soft on trade, so Chinese overtures aimed at agreeing some kind of resolution with the US are we want to hear.
Slapping tariffs on your closest trading partners, including your G7 hosts, was both bold and aggressive. Canada and EU officials will get another chance to bend Trump’s ear over the next few days, but the US president will not budge.
In fact, there are real concerns that further tariffs are likely. However, Trump will be emboldened by progress with China and would expect other trade rivals to follow and fall into line. G7 will not be the catalyst for weaker equity markets.
Source: interactive investor Past performance is not a guide to future performance
That Europe could take a step closer to economic normalisation next week is further food for the bulls.
Growth and rising inflation means there’s every chance the ECB will confirm its bond-buying scheme will end this year. Higher global bond yields amid rising optimism around ECB policy is great news for bank margins and the wider financials sector.
Overcoming further geopolitical risk, first the G7 meeting this week then the US-North Korea summit a few days later, will only further underpin yet another well-established recovery in stock prices. This remains the bull market that refuses to die.
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