Stock prices climbed across regions for the second consecutive month in February. Investor sentiment was buoyed by a combination of constructive US-China trade talks, a considerably more dovish stance from the US Federal Reserve and the implementation of Chinese stimulus measures.
US-China trade negotiations dominated the market’s attention. Areas of contention include tariffs, intellectual property and Chinese state-led subsidies for the technology sector. Although there was not a complete resolution on all of these aspects, there was enough progress in the negotiations to avert the increase in tariffs that was scheduled for 1 March. The ‘America First’ trade agenda remains a source of uncertainty for markets, not least because, following a report from the Department for Commerce, the US president has 90 days to evaluate whether to introduce higher tariffs on foreign-made cars. Such a decision could have a notable impact on Europe, and Germany in particular.
While the market is buoyed by the promise of Chinese stimulus, current economic data releases remain soft outside of the US. The downturn in capital expenditure (capex) is depressing industrial activity. As yet, consumer spending is looking more robust thanks to strong labour markets and the recent fall in the oil price.
Exhibit 1: Asset class and style returns in local currency
JPM Global Macro Opportunities Fund
Leveraging global macro themes to generate performance. This fund targets positive returns in various market conditions by capitalising on the opportunities created by economic trends within a risk-controlled framework.
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