Market Update

This week, which was anticipated to be dominated by central bank meetings and policy decisions, was unexpectedly overshadowed by US President Donald Trump's trade-related announcements.
Amidst months of quiet on the trade front and stalled negotiations with China, Trump surprised the markets by announcing a further 10% tariff on Chinese goods, scheduled to take effect on September 1st. This move followed two days of inconclusive trade talks between the US and China. While this posturing tactic has been seen before in attempts to pressure China, the timing of these tariffs, set after the planned trade talks in August, suggests that the current market pullback might be an overreaction. Short-term market reactions often create investment opportunities, as demonstrated several times this year.
Apart from trade, central bank meetings were in focus, especially the US Federal Reserve (Fed). Fed Chairman Jerome Powell, following his recent accommodative stance, cut the headline rate by 0.25%, disappointing some market expectations initially. However, Powell hinted at the possibility of more 'mini' rate cuts in the future, indicating a gradual approach to boost inflation to the 2% target. This strategy, while criticized by Trump, allows the Fed flexibility for 2020, potentially benefiting both US and global equity markets.
Additionally, the Bank of England kept rates steady at 0.75%, citing Brexit uncertainty as a significant factor. UK Chancellor Sajid Javid's announcement of £2.1 billion to prepare for a 'no-deal' Brexit showcased the UK's determination, possibly strengthening its position in negotiations with the EU.
The Bank of Japan maintained interest rates at -0.1%, emphasizing their willingness to adjust policies as needed. Economic data revealed steady unemployment rates in the US, improved Chinese manufacturing figures, and better-than-expected European GDP growth.
Despite short-term market reactions and sentiment fluctuations, this week's events created opportunities. On a lighter note, news of Indian Prime Minister Narendra Modi appearing on 'Man vs Wild' with Bear Grylls added an interesting perspective, potentially offering insights into Modi's character and enthusiasm for his country. (The episode is expected to air in August, although exact dates are subject to change.)