Financial Markets Daily Report

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In yesterday's session, investors traded with caution as concerns of further escalation in trade tensions rose after Donald Trump said that tariffs on Chinese products might increase if a deal is not signed.

In the first session of the week, investors traded with caution amid mixed news on the trade front.

Financial markets ended the week with a positive tone as investors perceived that a partial trade deal between the U.S. and China is closer. More concretely, the U.S. Commerce Secretary, Wilbur Ross, said that progress was being made in the agreement's details.

Markets continued to reduce their risk appetite after yesterday's release of Chinese indicators and as investors reassess the prospects of closing a U.S.-China deal soon.

Markets tilted towards a risk-off mood in a session dominated by U.S. news. U.S., German and other core sovereign yields declined, euro area peripheral spreads widened, safe-haven currencies (such as the CHF and the JPY) appreciated against the USD (while the euro was roughly stable), and stocks exhibited a poor performance globally.

Markets exhibited a somewhat more positive mood on the back of recovering sentiment indicators and as investors continued to eye trade talks developments.

Markets started the week on a cautious mood as concerns that the U.S. and China are struggling to close the first phase of a trade deal weighed on sentiment.

Markets ended the week with a mixed session in which there were no major economic releases.

On the back of advances in the trade negotiations between the U.S. and China, investor's risk appetite increased in yesterday's session.

In yesterday's session, the positive mood that investors showed in the previous days seemed to abate.

The appetite for risk that investors showed in the previous sessions seemed to moderate on Tuesday and risk-on flows were more contained.

Despite the weakness shown in the sentiment indicators for some euro area countries, investors' optimism on trade tensions fuelled risk-on flows.