Tariffs shrugged off; markets move higher

Weekly Report - 09/07/2018

Markets move higher

markets-rise


Markets started the new trading week on a positive note, brushing aside the trade tariffs. Risk currencies such as the Australian dollar outperformed on risk appetite, while Asian equity markets has a good session and European stocks opened in the green.

The Week that was


The dollar ended lower last week after a mixed U.S. jobs report. Overall job growth was strong but the unemployment rate and average hourly earnings were disappointing, thus pushing the greenback down. Meanwhile, the U.S. – China trade war escalate to another level last Friday as the tariffs went into effect on both sides. A total of $34 billion worth of duties was imposed on each other’s imported goods. The markets seem to be setting aside trade war concerns and the Chinese currency rose against the dollar. It was helped by the recent news from Chinese officials that they wouldn’t use the yuan as a trade-policy weapon.

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Main Focus This Week


Earnings season begins and investors will be focusing on quarterly earnings announcements from companies starting this week. Asian stocks already started the week on a positive note, followed by European equity markets, all on general risk appetite. The pound will be in focus this week. The currency made a quick recovery after having opened lower on Monday in reaction to news that David Davis quit as Brexit secretary. Davis says PM Theresa May is putting the U.K. in a ‘weak’ negotiating position. Sterling remains supported by expectations of an interest rate increase as early as August. U.K. GDP data will be watched this week and would likely be a catalyst for the BOE to raise rates if the numbers come in stronger.

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