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Major global equity indices advanced today, reflecting investor appetite for risk assets, but not enough to salvage a tumultuous week battered by intensifying trade tensions, lackluster activity data and increased uncertainty on Brexit trajectory following UK PM May’s decision to quit.
Safe-haven bond yields continued to trend lower, dragged by the ongoing US-China trade strains, alongside the release of a gloomy business survey in Europe and increasing anxiety over a no-deal Brexit
Financial markets trade in a cautious fashion, as investors wait for new developments in the US-China trade dispute, amid the US mulling over whether or not to add five new Chinese technology firms to a blacklist. The lack of support of May’s new Brexit plan also increase the risk-off mood.
Financial market mood improved slightly today, after the US granted Chinese tech major Huawei a 90-day conditional waiver to continue doing business with US companies.
US ‘blacklisting’ of China’s technology major Huawei further undermined the frayed US-China relationship while dimming prospects of a trade deal.
In what was a highly volatile week for financial markets, marred by the tit-for-tat US China trade dispute, equity volatility swung sharply.
The dynamics of Global Investment Funds flows in 1Q19 can be characterized by a widening bond-equity divergence, and a visible moderation in inflows to EMs. Looking ahead, we expect EM outflows to continue at a moderate pace until global volatility eases. In a risk scenario, EMs to face more intense and persistent outflows.
Equity markets bounced back trimming some loses inflicted by the renewed trade tensions, while volatility eased as Trump announced a six month extension of the deadline for imposing auto tariffs on Europe and Japan. Expectation of central banks support also contributed to the positive market tone today.