Weekly Digest - INVESTEC
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Despite the US’ introduction of the enhanced 25% level of tariffs on $200bn of Chinese imports at the end of last week, and almost inevitable retaliatory moves by China, it only took a tweet from Donald Trump intraday on Friday to improve sentiment. The S&P had been trading down 1.4% on Friday morning, putting it firmly on track for one of its worst weeks of trading for quite some time before the Donald tweeted that talks had been “candid and constructive”. This prompted a rally to leave the S&P up 0.4% on the day, though still down 2.2% for the week (the worst since the pre-Christmas week). His tone over the weekend though turned much more antagonistic again, amongst other things suggesting that China should look to strike a deal now rather than having to deal with him (Trump) during his second term. The Chinese have taken an equally strident tone and the main US equity markets are down 2.5% as I type, whilst safe haven trades such as gold, and US government debt are well supported.
There are no further official talks scheduled regarding trade, though Beijing has invited Messrs Lighthizer and Mnuchin to China, and it is suggested that President Trump may meet President Xi at the G20 summit in Japan next month (28th – 29th June).
Brexit will no doubt feature prominently in the domestic news, with suggestions that Theresa May is poised to try and once again renegotiate the terms of the Withdrawal Agreement with the EU.