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Danske Bank analysts suggest that the global risk sentiment had a tough week last week with the renewed US-China trade war tensions.

Key Quotes

“By the end of the week, the US-China trade talks in Washington ended in what looked like a deadlock – positions that seem to have been further entrenched. Both sides sent signals of cautious optimism but the underlying development suggests a bigger crisis in the negotiations.”

“The trade teams have agreed to meet again in Beijing, but not when. At the same time, President Trump’s economic advisor said there was a ‘strong possibility’ for Trump and Xi to meet at next month’s G20 in Japan.”

“The US has given China a month to make concessions or otherwise face tariffs on all imports. In this case the tariffs could come into force in early August. We see an increasing risk that the trade talks drag out into H2 and that it will get worse before it gets better.”