After a good start into the second quarter, with US stock indices hitting new marginal highs on April 29 and May 1, investor sentiment soured on May 6, as US President Donald Trump shocked market participants with an overnight tweet that effectively ended the US trade talks with China. Stocks dropped sharply in response, but a US-led recovery seems to have started in the meantime.
In that context, it is important to note that US equities thus far have clearly outperformed since the so-called trade war began to heat up in early 2018, particularly vis-à-vis the emerging markets. The interim phases of détente were thus far not long enough to bring about a reversal of that pattern.
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Note: The next edition of the LGT Beacon is scheduled for July 2019.