Within equity markets, we saw a rise in volatility this week. The week started well with a moderate rise of stock markets, but on Wednesday, equity prices went down in European and emerging markets.
Italian stocks lost most within Europe, after plans of the new government in Italy surfaced. Within emerging markets, Turkish, Brazilian, Indian, South African and East-European stocks lost more than the Asian stocks. The Turkish market suffered from the weak position of the lira.
The possible trade deal between the US and China was an important theme this week. On Sunday, US Treasury Secretary Steven Mnuchin announced that the administration agreed to put proposed tariffs on hold, while it is building on a framework for negotiations with China on trade issues. The day after, the Chinese government declared that it would lower the import taxes for cars from 25% to 15% as of the 1st of July. The lower tariffs would not only apply to American car makers, but worldwide. As a result, BMW and Tata Motors (known for Jaguar Landrover) posted their biggest gains in a month. On Wednesday, however, Trump said that a US-China trade deal may be too hard to get done.
Possible sanctions for Iran also had a negative effect on the markets, because they would hurt worldwide trading volumes. In the period 2010-2015, USD 77 billion in trade had been lost, because of the sanctions imposed on Iran. European countries, South-Korea and Japan were hurt most, while there was just a minor effect on American companies.
Energy stocks showed the worst performance this week, followed by materials. This contributed to a weak performance for countries that are net exporters of oil and gas and basic materials, such as Brazil, South-Africa and Russia. Best performing sectors were IT and utilities.