Global weekly: Muted markets

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Equity markets edged lower this week, moving in tandem with bond yields. The US missile attack on Syria only evoked a muted market response.

Equity markets moved slightly lower in the past couple of days. US markets were off to a cautious start of the week, as investors pondered the possibility that President Donald Trump may need more time to implement his tax plans for the US economy. Later in the week, strong US job data provided support to equities. The US strikes on Syria on Friday did not materially impact markets.

European markets retreated somewhat as well. Paints and coatings company AkzoNobel is increasingly pressured by its US peer PPG to talk about a possible takeover. PPG’s CEO said that the vast majority of Akzo’s biggest shareholders wants the Dutch company to reconsider its earlier rejection of PPG’s offer. PPG intends to make a formal bid in the coming months.

The minutes of the Federal Reserve’s (Fed) March meeting, published on Wednesday, showed that participants of the meeting suggested to trim the Fed’s balance sheet earlier than expected. Equity markets – especially financial stocks – in the US, Europe and Asia reacted negatively on the hawkish remarks. The reason behind these remarks, however, is that the economy is getting in good shape faster than expected. And that is an important driver for equity performance. The upcoming earnings season should show decent results. Firstquarter earnings growth is expected to be solid compared with relatively low earnings for the first quarter of 2016, when commodity prices were under severe pressure. The first big companies to report are US banks Citigroup, JP Morgan and Wells Fargo next week.

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