Mar­kets are climb­ing the ‘wall of worry’

Trade dis­putes are in fo­cus ahead of an im­por­tant G7 meet­ing

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IN­VESTORS AP­PEAR to be shrug­ging off sev­eral po­ten­tial macro-eco­nomic and po­lit­i­cal risks as US and Europe in­dices con­tinue to trade close to record high lev­els.

The abil­ity of the mar­ket to sur­mount sev­eral neg­a­tive fac­tors and con­tinue ris­ing is of­ten de­scribed as climb­ing the ‘wall of worry’.

The main neg­a­tive

fac­tors cur­rently at play are de­te­ri­o­rat­ing re­la­tions be­tween the US and sev­eral ma­jor trad­ing part­ners as well as po­lit­i­cal tur­moil in Europe.

For now, the mar­ket ap­par­ently be­lieves US pres­i­dent Don­ald Trump’s bark is worse than his bite on trade de­spite the im­po­si­tion of tar­iffs on steel and alu­minium from the EU, Mex­ico and Canada and

a breakdown in talks with China over the last week or so.

The G7 sum­mit in Que­bec on 8 and 9 June is likely to be dom­i­nated by the trade is­sue. In Europe the fall-out from the re­cent change of prime min­is­ter in Spain and a for­ma­tion of a new pop­ulist govern­ment in Italy con­tin­ues as the lat­est Brexit talks get un­der­way. (TS)

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