Market Update

The highlight of the week was the two-day G-20 summit in Japan, commencing on Friday, June 28, 2019. All eyes were on the meeting between Donald Trump and his Chinese counterpart, Xi Jinping, scheduled for Saturday, June 29, 2019. The significance of this meeting grew as the week progressed, especially after the US announced its decision to add more Chinese technology companies to its trade blacklist due to national security concerns. This move complicated trade negotiations, dampening initial hopes for a restart in talks.
Amidst the tough posturing and escalating tensions, optimism waned, leading to relatively flat global equity markets by the end of the week. Hopes for a productive meeting faded, and the best outcome now seems to be a truce that would allow trade talks to resume. While a lack of progress in the meeting could cause market jitters, it may prompt major central banks to expedite interest rate cuts and loosen monetary policies. Additionally, it could prompt China to implement robust stimulus measures, mitigating the negative impact on equity markets.
Heightening the cautious atmosphere were the persistently elevated tensions in the Middle East, despite the absence of military action last week. Donald Trump's imposition of sanctions on Iran's supreme leader, Ayatollah Ali Khamenei, added to the geopolitical concerns, although the sanctions were largely symbolic.
Economically, the week was relatively quiet. Eurozone economic confidence reached its lowest level since August 2016, influenced by trade tensions that weighed on both business and consumer sentiment.
Looking ahead to the coming week, several Fed policymakers, including Richard Clarida, Loretta Mester, and John Williams, are scheduled to speak. Investors will be keenly listening for hints regarding the timing and magnitude of the next US interest rate adjustment. The primary focus for economic data this week will be on Friday, July 5, 2019, with the release of US employment data, including non-farm payrolls, the unemployment rate, participation rate, and average earnings. Additionally, on Sunday, June 30, 2019, China's PMI data will be released, capturing market attention.