This weekend, markets will find out whether their hopes for a restoration in US-China trade talks will become reality, and whether the scope for further deterioration in bilateral relations would be significantly constrained.
It remains to be seen whether the public displays of chest-thumping from both sides since May will eventually lead to handshakes and smiles on Saturday. Such a reconciliatory image out of the Trump-Xi meeting is expected to send relief signals coursing through the veins of the markets, potentially boosting global equities and emerging-market assets.
Still, the prudent investor would be well aware that the road ahead isn’t all plain sailing, given the tremendous gulf that still remains between both governments, with tit-for-tat tariffs still in place. As long as the prospects of more trade tariffs loom large over the horizon, risk aversion should continue having a major say on market sentiment.
