Last week the focus in global markets shifted back to how trade negotiations between the US and China were developing.
US and Chinese officials announced last week Thursday that they have agreed to roll back tariffs in stages. This pushed US indices to new record highs as a sign of true progress. However, the next day Trump said that he had not yet agreed to this. The market took this bad news surprisingly well and recovered not too long after.
Trump did not deny that it could happen, however the chance of a complete roll back is highly unlikely. He will probably make concessions to the tariffs and agree to roll back some of them as he is under pressure politically, but it still remains his biggest bargaining chip. Important to note that China sees the proportionate, simultaneous roll-back of existing tariffs as a necessary condition for reaching the Phase 1 trade deal.
This morning the events in Hong Kong have spooked markets with the violent protests escalating to new levels.
What to look out for this week
Tomorrow Trump is speaking in New York and could make further remarks on his stance with the current China negotiations.
US Fed Chair Jerome Powell is testifying on Wednesday and Thursday and should give some more guidance as to the Fed’s monetary policy stance currently.
Third quarter (Q3) GDP data from major countries are released this week which should give an idea of how bad the slowdown in global growth has been – UK (today), Eurozone, Japan and Germany (Thursday).