Markets in Details: 03 July 2019

3 July, 2019

Markets pause after a record run


Markets in Europe and the U.S. were flat on Tuesday after the record run of major U.S. indices fueled by the trade truce between the U.S. and China announced at the G20 meeting.

While state media in China did not paint a rosy picture of the truce, a view shared by Huawei’s founder Ren Zhengfei, the news that the trade talks were to be resumed was enough to lift stocks and bring back the risk appetite of investors who had been aside due to uncertainty.

Visible risks remain


Today, the UK PMI data pointed to a sharp downturn in construction activity due to Brexit concerns. The British 10-year bond yield slipped to its lowest level since 2016 on the news.

Mark Carney, the Bank of England governor, has delivered a downbeat assessment of the development earlier today stating that Brexit caused a slump in business investment and the UK is reliant on consumer spending in the first half. He also warned that investors should not expect the bank to cut interest rates in case of an “orderly” Brexit as housing could rally and business investments could stage a rebound prompting it to be vigilant of inflationary pressures.

The Trump administration went on the offensive by proposing new $4bn  tariffs on EU goods due to a long-standing dispute over aircraft subsidies. The USTR office also targets at cheese, coffee, pasta and olive goods. Observers fear that new trade disputes will continue to dampen global growth and soften consumer demand. WTI crude moved down to $57 after almost reaching $60 in the last two sessions.


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