Market Update

This week has felt like a Sunday following a big Saturday night out – a bit slow and a bit fuzzy after the excitement of the previous week. In this case, the excitement came from US President Donald Trump's tariff threats and the subsequent reaction in the markets, followed by the hangover effect this week.
As mentioned in last week's market summary, short-term news and tariff threats tend to create market volatility and present buying opportunities. That’s precisely what we saw this week. Initially, there was a negative impact due to the tariff announcements and concerns about Chinese retaliation, but later in the week, there was a bounce back. Essentially, not much has changed in the negotiation tactics of both nations. The noise-driven market fluctuations might be worrying, but they also create opportunities for savvy investors.
Apart from the tariff talks, there were significant data releases. Chinese trade data released on Thursday was stronger than expected, with exports growing by 3.3%, indicating that perhaps the impact of trade tensions is not as severe as sentiment suggests. Next week’s US trade data will provide further insights. Additionally, German Factory Orders and French PMI data exceeded expectations, indicating resilience in the face of global trade tensions. Meanwhile, Italy faced political uncertainties, leading to pressure on Prime Minister Giuseppe Conte, a common occurrence in Italian politics.
In central banking news, the Reserve Bank of India made an unprecedented interest rate cut of 0.35% to stimulate the economy. China also released inflation data, surpassing expectations at 2.8% year-on-year, indicating a stronger economy than anticipated. In the UK, second-quarter growth data showed a contraction of 0.2% quarter-on-quarter, which was expected due to Brexit-related uncertainties. A recovery in growth is anticipated in the third quarter.
Looking ahead, the focus next week will be on US trade data and European GDP. For car enthusiasts, there's excitement as the 'Sotheby's Collector Car Auction' is scheduled, featuring an original McLaren F1 as the highlight, with an estimated auction price of $23 million!