Global equity markets simply traded news headlines this week.
The announcement of a bilateral trade deal agreement between the US and Mexico pushed equities higher as optimism grew that the global trade war was now potentially getting closer to ending as Donald Trump could now progress talks with China, Canada and the EU.
However, this optimism meant that the market was caught off-guard when Donald Trump rejected an EU offer to scrap tariffs on cars and said that he wants to impose tariffs on $200bn of Chinese imports as soon as a public-comment period concludes next week (so far the US has only imposed tariffs on $50bn of Chinese goods).
In the UK, the pound strengthened thanks to comments from the EU Brexit negotiator, Michel Barnier, who implied a Brexit deal was close when he said the EU is prepared to offer the UK an unprecedented partnership. As I highlighted last week, there is an inverse relationship between the pound and the FTSE 100 – and so as the pound strengthened, the FTSE-100 sold-off.