The most notable story of the past week was arguably the breakout of a truce in the escalating trade war between the United States and China on Saturday following talks at the G20 meeting in Japan. The outcome was broadly in line with the market’s assumptions for the conference, global equities finished the week down -0.16% in GBP terms while UK equities rose +0.36%. Global bonds provided a nice hedge to the equity sell off and rose +0.23%, while Sterling bonds rose +0.01%. Sterling rose in value against the dollar over the course of the week, while the Euro strengthened against the Pound.

Expectations regarding the actions of major central banks have been the other major force driving markets recently. The assumption that the Federal Reserve will continue to cut rates to stimulate the economy has provided some support to markets in the face of the ongoing trade war – allowing the US equity market to remain flat since the commencement of the trade dispute in May.

As we continue into the second half of the year, we remain aware of the reality that trade is now being employed as an instrument of foreign policy and remain cautious in our asset allocation, given the increased tail-risks this new-normal brings with it.