US President Donald Trump and European Commission President Jean-Claude Juncker agreed to suspend existing tariffs while negotiating zero non-tariff barriers and zero subsidies on non-auto industrial goods. Global stock markets rallied following the news, with the US S&P 500 stock market index reaching 2,848.03 – its highest value since this January.
Putting an end to trade wars will be good news for global growth, according to Fitch Ratings. The credit ratings and research agency also suggested that a rise in protectionism would reduce growth by 0.4 per cent and down from the previously forecasted 3.2 per cent to 2.8 per cent in 2019, should new tariffs worth $2 trillion be implemented on global trade.
Social media giant Facebook Inc yesterday, 25 July released its second-quarter earnings, which were worse than expected. Earlier this year Facebook CEO Mark Zuckerberg was questioned about the company’s privacy policies as a result of a data breach involving the British political consulting firm Cambridge Analytica. The company’s stock has since rallied by almost 30 per cent, but in afterhours prices plunged by 20 per cent, losing $123 billion in market value.
My focus today will be on the European Central Bank’s (ECB) monetary policy announcement at 12:45 (GMT). I expect interest rates will remain unchanged, but the question everyone is asking at the moment is whether or not the central bank will mention the risk of a trade war and if there are any plans to raise interest rates next year. At its meeting in June, the ECB was surprisingly dovish, and I anticipate a similar rhetoric today.