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LGT Navigator: China-EU alliance against Trump?

July 5, 2018

In view of Wall Street's absence due to the US national holiday, international stock markets lacked new impetus. However, the global trade conflict continues to determine the sentiment on capital markets and no relief seems to be in sight. China has announced that it will respond to the US punitive tariffs on Chinese goods of USD 34 bn, which will come into force this Friday, with a counter-attack of the same amount. Beijing also seems to be pushing for an alliance with the European Union against Trump's protectionist line at the Sino-European summit in Beijing on July 16 and 17.

The ECB's cautious bias toward an interest rate turnaround, despite the announcement to end its billion-dollar bond purchase program probably at the end of this year, weakened the euro significantly. The ECB maintained its key interest rate at a record low and remained extremely cautious in its communication. At the same time, the Bank of Japan also left its key interest rates unchanged and even lowered its inflation expectations.

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