The stock markets returned to optimism, for how long?
China will hold telephone talks with the US on the 1st of September, i.e. the day when Donald trump promised to raise tariffs on Chinese goods worth $300 billion in the news, as well as unexpectedly strong inflation data in the US has provoked the reduction in the yield of 2-year treasuries relative to the 10-year to the lowest level since 2007.
On Tuesday, investors were pleasantly surprised – trump has decided to postpone the introduction of a 10% aqueous tariffs on some Chinese goods until mid-December. Mitigate the tariff impact has caused a massive surge of optimism and short covering in the segment of risky assets. Improved sentiment has not bypassed the Russian market, however, the leading indices closed in different directions. Due to the sharp strengthening of the ruble index Masuri not able to show growth and dipped the end of the session on 0,36% – to 2680,12. Meanwhile, RTS has risen on 0,29%, ending trading at around 1297,85.
The us leader continues to deftly orchestrate the markets, and here you can see the trend in which he reports favorable news, when the fall of U.S. stocks deepened, and accordingly inhibits their growth. So, after yesterday’s statements trump the S&P index jumped 1.5%, reducing the losses of August to 1.8%. Exacerbating the market reaction to any signals on that front, the fact that global investors are now fixated on the trade confrontation, which depend largely on the prospects for the world economy. Additional optimism yesterday brought reports that two weeks later, Washington and Beijing will hold telephone talks.
However, the players ‘ optimism could be short lived. First, emotions after the initial reaction will soon subside. Second, trump has introduced a delay of much more modest group of products, while other categories of fees will enter into force on 1 September. Third, spoil the picture of weak Chinese data released this morning. In July, industrial production growth slowed to a more than 17-year low and retail sales did not meet even the most modest predictions. Against this background, we can expect a gradual cooling of positive moods and neutral start of the Russian session.
Director for analysis of financial markets and macroeconomics
IR “Instant invest”: