This week financial markets remained highly sensitive to political and geopolitical developments with the China-US trade war and Brexit negotiations in the spotlight. Even though the so-called “phase one” trade deal looks more and more like a dud, market participants remained mostly bullish. After temporary weakness, S6P 500 futures resumed the upward trend.
Across the Atlantic, hopes for a positive resolution of Brexit negotiations between the EU and the UK gave a boost to equities and the pound sterling.
GBP/USD was able to consolidate last week’s spectacular gains – when it rose more than 4%, from 1.22 to 1.27 – and is now trading sideways around 1.2650 as negotiations will continue throughout the week.
In Switzerland, pharma stocks took a hit yesterday after US Trade Representative Robert Lighthizer suggested the US administration could impose tariffs on pharmaceuticals from Switzerland in an attempt to balance a negative total trade balance of $20bn in 2018. The US accounts for more than a third of Swiss pharmaceutical exports. Stocks of Swiss pharmaceutical companies dropped at the opening yesterday with both Roche and Novartis falling almost 2%; however, both trimmed losses during the course of the day.
Given the lack of major economic news this week, financial markets will remain highly sensitive to those developments and would most likely continue trading sideways in the absence of significant resolution on the trade war and Brexit fronts.
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