The most likely result – and the outcome considered the best possible – is what materialized at this past weekend’s G20 meeting in Japan.
China and the US agreed on a trade truce, in which no further tariffs will be imposed and with continued talks to reach a deal. Equity markets are higher on the news, with Chinese stocks up 2%. Yet, some caution remains warranted. As we have seen before, a truce does not necessarily result in a trade deal. Hence, uncertainties remain, which will continue to be reflected in macro data like the manufacturing PMIs.
Further gains in equity markets are now heavily dependent on an improvement in economic growth in the second half of the year.