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LGT Navigator: Trade war heats up

May 10, 2019

The trade conflict between the world's two largest economies, the US and China, continues to keep investors on stock exchanges in suspense. In the meantime, the US is seriously threatening to increase the already applicable special tariffs on Chinese imports from ten to 25 percent per day. China suddenly announced that it would take countermeasures. Investors on the stock markets were disappointed and indices in Europe and Wall Street came under renewed pressure. In Asia, the picture is mixed and Chinese stock markets are even trading in positive territory.

The minutes of the US Federal Reserve's last monetary policy decision on March 20 confirmed the Fed's wait-and-see attitude. There are still "significant uncertainties" in the economic outlook, and latest US inflation data will probably not put pressure on the Fed to raise key interest rates again in the near future. ECB President Mario Draghi continues to see growth risks for the euro zone and recent economic data have confirmed that the pace of growth in the euro area is slowing. Nevertheless, the likelihood of a recession remains low.

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