Easing Tensions Between the US and China Boosts Global Markets

Global stock prices surged last week as investors were encouraged by the easing of trade tensions between the US and China. On Wall Street, the Dow Jones rose 3.4 percent to 42,654 points, while the S&P 500 jumped 5.3 percent to 5,958 points, and the Nasdaq index increased by 7.2 percent to 19,211 points.

These indices saw their largest gains on Monday after the US and China reached an agreement on a temporary reduction of reciprocal tariffs during negotiations in Switzerland over the weekend. According to the agreement, the US reduced tariffs on imports from China from 145 to 30 percent, while China reduced tariffs on imports from the US from 125 to 10 percent. These measures will be in effect for 90 days, during which trade negotiations between the US and China will continue.

As a result, fears of a recession have eased, and investors are hopeful that a final trade agreement between the two largest economies will soon be reached.

– “This is a relief as there has been a lot of concern regarding tariffs between the US and China. Tariffs will be reduced to much more reasonable levels, so their negative impact on the economies should also be smaller,” says John Praveen, director at Paleo Leon.

Following last week’s rise, the S&P 500 is now only about 3 percent away from its record level reached in February. This means it has recovered all losses since early April when US President Donald Trump rattled the markets by imposing reciprocal tariffs. This is primarily due to investors’ hopes that current tariffs will be reduced and that Washington will reach favorable agreements with its largest trading partners.

– “Investors are expecting agreements, and that is why stock prices have recovered losses. I would call this phase in the market ‘waiting for an agreement,'” says Dennis Dick, a trader at Triple D Trading.

Growth in Europe and Zagreb

Stock prices also rose on European exchanges last week. The London FTSE index strengthened by 1.5 percent to 8,684 points, while the Frankfurt DAX rose by 1.1 percent to 23,767 points, and the Paris CAC increased by 1.8 percent to 7,886 points.

On the Zagreb Stock Exchange, the Crobex indices also rose sharply last week for the fourth consecutive week, hovering around record levels, with higher trading volumes than the previous week, primarily due to trading in shares of Končar companies. The Crobex index jumped 2.92 percent to 3,479 points, while Crobex10 rose by 2.75 percent to 2,204 points. The indices recorded gains for the tenth consecutive day on Friday.

Both indices continued their ascent for the fourth consecutive week, with Crobex gaining about 9 percent and Crobex10 about 10 percent during this period. This brings Crobex to its highest level since the end of January, while Crobex10 has returned to its record levels after nearly three months. Among sector indices, Crobexkonstrukt saw the largest increase, rising by 6.42 percent, while Crobextransport fell the most, by 1.8 percent.

Regular trading volume amounted to 12.7 million euros, which is 3.3 million more than the previous week. The most liquid stock was Končar EI, with a turnover of 4.9 million euros, whose price rose by 3.85 percent to 540 euros. Following were the shares of Končar D&ST, which saw a significant price jump. Thus, the regular share, with a turnover of 1.3 million euros, increased by 17.24 percent to 3,060 euros, while the preferred share, with a turnover of 1.2 million euros, rose by 20.5 percent to 2,940 euros. However, the largest price increase was recorded by the shares of Liburnia Riviera Hotels, which rose nearly 32 percent to 414 euros, with a turnover of 50 thousand euros.

Among the more liquid losers, the shares of Helio Faros stand out, with a price drop of 8.6 percent to 64 cents. The shares of Zagrebačka banka were also in focus for investors, with a turnover of 654 thousand euros, and their price fell by two percent to 24.5 euros.

Last week, a total of 59 stocks were traded on the ZSE, with 42 prices rising, 15 falling, and two remaining unchanged.

The Dollar Strengthens for the Fourth Consecutive Week

After a sharp decline in early April due to the US’s tariff war with the rest of the world, the dollar has been recovering in recent weeks as trade tensions ease. On the currency markets, the value of the dollar against a basket of currencies has risen for the fourth consecutive week, thanks to the easing of trade tensions after the US and China reached an agreement on a temporary reduction of tariffs.

The dollar index, which shows the value of the US dollar against six major world currencies, strengthened by 0.55 percent last week to 100.98 points. Meanwhile, the euro exchange rate slipped by 0.7 percent to 1.1165 dollars. The US currency also strengthened against the Japanese yen by 0.2 percent, reaching a price of 145.65 yen.

Support for the dollar has also come from solid economic data, particularly the inflation report. In April, consumer prices in the US did not rise significantly despite the imposition of tariffs. However, they did not fall significantly either, so the likelihood of the US central bank reducing key interest rates in June is diminishing.

Analysts estimate that the Fed will reduce rates twice this year by 0.25 percentage points each time, but only in the fall. Fed officials have been signaling for some time that the introduction of tariffs could slow economic growth while inflation could strengthen, so future economic data should be awaited before making decisions on interest rates.