Financial Markets Update – 26/7/2018

US

  • US. equities gained 0.9% yesterday, after it was reported Donald Trump reached an agreement with European Commission President Jean-Claude Juncker aimed at averting a trade war. The two sides agreed to expand European imports of U.S. liquefied natural gas and soybeans and lower industrial tariffs on both sides.
  • The US 10-Year Treasury yield fell to 2.96% on the news, and the dollar steadied against the Euro.
  • In stock specific news, Facebook shares were weak after hours indicating that they would open down 20% today after reporting mixed 2Q18 results. Facebook is not a holding in any of the Goodbody Asset Management Funds.

 

Europe

  • European equities declined 0.4% on Wednesday ahead of a last-ditch meeting in Washington between U.S. President Donald Trump and European Commission chief Jean-Claude Juncker to avoid a trade war.
  • Automobile stocks, to be among the hardest-hit if threatened tariffs aren’t circumvented, were the worst performers, with the sector closing down 2.9%.
  • The ECB’s policy decision comes later today. Market pricing suggests no deposit rate increase until at least December 2019, so any nod to sooner may boost the Euro and depress bonds. Investors will also focus on any potential shift in reinvestments after the QE program ends this year.

 

Asia

  • Asian market extended its gain for a third day after the U.S. and EU agreed to suspend new tariffs, lifting investor sentiment.
  • Japanese stocks were broadly flat and Chinese equities fell 0.8% yesterday.

 

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