Markets partially offset the last week decline without invalidating the downward short term trend, with a 0,6% increase for the stoxx600 and a -0,65% decrease for the S&P500.
Latam outperforms (LATAM) : weekly data
The stabilization is mainly due to the beginning of a thaw between North Korea, which has for the moment postponed its project to send missiles to the island of Guam, and the United States which welcomed this first gesture of appeasement. However, military exercises between South Korea and the US should take place as scheduled for a 10-day period starting on 21 August - which is seen as a direct threat by North Korea and could lead to a new missile launch or even a nuclear test, which would rekindle tensions. In the absence of further escalation among the protagonists, the situation could move towards a "ni-ni", ie no diplomatic solution, while the nuclearization of the Korean peninsula does not seem to be negotiable from the North Korea point of view, which sees in it the assurance of its survival, nor military conflict of which the human and economic cost would be unbearable.
On the other hand, an increase in US pressure on China seems to be in cards, with the US administration announcing the opening of an investigation into possible trade violations by China (the technology transfers requested by China to US companies to access its domestic market are particularly targeted, as well as intellectual property violations). In addition, central banks have sent mixed signals this week, while the Fed is increasingly concerned about the low level of inflation and some officials have called to stop the rate hike as long as there is not clear signs of reflation, according to the report of the last meeting published Wednesday.
The ECB has expressed its fear of an excessive rise in the euro which would offset the beneficial effects of its accommodative monetary policy and consequently decided not to change its commitment to pursue its policy of supporting the euro, which has weighed on interest rates. Over the week, the Euro / dollar parity remained virtually unchanged at around 1.18, while European 10-year yields slightly strengthened.
European Utilities get stronger (UTI) : weekly data
On the other hand, volatility declined markedly in the wake of the decline in geopolitical fears.
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Markets partially offset the last week decline without invalidating the downward short term trend, with a 0,6% increase for the stoxx600 and a -0,65% decrease for the S&P500.
Latam outperforms (LATAM) : weekly data
The stabilization is mainly due to the beginning of a thaw between North Korea, which has for the moment postponed its project to send missiles to the island of Guam, and the United States which welcomed this first gesture of appeasement. However, military exercises between South Korea and the US should take place as scheduled for a 10-day period starting on 21 August - which is seen as a direct threat by North Korea and could lead to a new missile launch or even a nuclear test, which would rekindle tensions. In the absence of further escalation among the protagonists, the situation could move towards a "ni-ni", ie no diplomatic solution, while the nuclearization of the Korean peninsula does not seem to be negotiable from the North Korea point of view, which sees in it the assurance of its survival, nor military conflict of which the human and economic cost would be unbearable.
On the other hand, an increase in US pressure on China seems to be in cards, with the US administration announcing the opening of an investigation into possible trade violations by China (the technology transfers requested by China to US companies to access its domestic market are particularly targeted, as well as intellectual property violations). In addition, central banks have sent mixed signals this week, while the Fed is increasingly concerned about the low level of inflation and some officials have called to stop the rate hike as long as there is not clear signs of reflation, according to the report of the last meeting published Wednesday.
The ECB has expressed its fear of an excessive rise in the euro which would offset the beneficial effects of its accommodative monetary policy and consequently decided not to change its commitment to pursue its policy of supporting the euro, which has weighed on interest rates. Over the week, the Euro / dollar parity remained virtually unchanged at around 1.18, while European 10-year yields slightly strengthened.
European Utilities get stronger (UTI) : weekly data
On the other hand, volatility declined markedly in the wake of the decline in geopolitical fears.