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Global markets were mixed last week as investors digested dovish central bank commentary and new economic data. The S&P 500 rose 0.8% and ended the week at a record high, riding momentum provided by some stronger-than-expected second-quarter earnings releases. European indices, however, were less optimistic in the face of apparent risks to global growth. The Euro Stoxx 600 fell 0.8% and the FTSE 100 ended the week down 0.6%.
Equity markets have nudged broadly higher this week but are muted, with plenty of focus on fraying international relationships between political leaders. US-China trade talks remain the fulcrum of market narrative and reports suggest that senior US officials could travel to Beijing if talks go well this week.
The Chinese economy grew at the slowest rate in 27 years in the second quarter, registering 6.2% year-on-year compared to last year. China’s GDP growth has been losing momentum owing to a weakening global economy and higher US tariffs, leading to Donald Trump gloating about the impact of his trade policies.
Meanwhile, Trump has come under fire for suggesting four American congresswomen from minority backgrounds should “go back” to where they came from. The President has been criticised by international leaders, including both candidates for Downing Street. Boris Johnson called the language used “totally unacceptable”.
With a week to go until the UK has a new Prime Minister, reports have emerged that the EU is considering potential concessions to offer in order to avoid a no-deal Brexit. EU officials expect negotiations to become more hostile and withheld some bargaining tools when it realised Theresa May was unlikely to get any deal through Parliament.
Finally, oil prices rose sharply last week amid supply-side pressures. A tropical storm in the Gulf of Mexico had a significant impact on production, while tensions continued to intensify in the Middle East. Brent crude oil ended the week up 3.9%, before falling back slightly yesterday.
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