Reciprocal tariff relaxing supports global markets

Beijing’s decision to exempt 16 types of US products from retaliatory import tariffs and President Trump’s response delaying implementation of tariff hikes from 25% to 30% on $250 billion of Chinese goods for two weeks as a “gesture of good will” highlighted easing trade war concerns last week. The SP 500, Dow and Nasdaq entered uptrend after breakouts from month-long consolidation triangles, extending gains exceeding 1%. The ICE US dollar index lost another 0.2%, entering into a downtrend.

All six largest developed market indexes kept advancing last week. Nikkei was the gains leader: it rallied 3.7%. Four out of six major currency pairs maintained previous week’s dynamics, and the range of major currency pairs’ weekly fluctuations halved while it shifted up. The British Pound was the leader in terms of percentage change: it rose 1.6% against the US dollar.

The central bank policy meetings dominate this week’s important events calendar. Federal Reserve is expected to cut rates at conclusion of tow-day meeting on Wednesday, while the Bank of Japan, Swiss National Bank and Bank of England are seen as holding policies steady on Thursday.