SPX: tariffs weekly tweet update

The US Administration trade tariffs continue to bring confusion among market participants, but despite this, the S&P 500 managed to end May with a gain of 6,2%. The tariff-weekly-news included the announcement of the US President on social media that China “violated” current tariffs agreement. Although there were no further explanations, Bloomberg published information from an uncited source, that the US is planning to bring tariffs to China tech sector. At the same time, there was no official confirmation from the US Administration. The European Union is considering countermeasures on the US, after the announcement of the US Administration on an increase of tariffs on steel from 25% to 50%. All these ping-pong tariffs measures from the last period are causing some investors to slowly lose temper, with comments like “If you are an investor, you want to bet on good earnings, not good tweets about tariffs”, as Jay Hatfild from Infrastructure Capital Management told to CNBC. This brings some confidence that the markets will not make stronger moves on tweets, but only to actual moves of the US Administration in the coming period. Trading during May might provide some confidence also for the future period.

In line with investors, the University of Michigan Consumer Sentiment showed some relaxation with the final May data. The indicator ended the month at the level of 52,2 a bit better from estimated 51. The most important are inflation expectations which also eased a bit from previous release, in which sense five year inflation expectations are currently at 4,2%, and below market estimate of 4,6%.

The market confusion will most certainly continue also during June, but it seems at the lower volatility levels. More attention will be turned to macro data, and company earnings. The first trading week in June is bringing US jobs data, including the Non-farm payrolls, which might bring back some volatility on US equity markets.