Indicators of economic sentiment suggest that trade problems between the US and China are the main problem for global investors. Sentix indices indicate that the economic sentiment in the US and Asia remain at good levels, despite the deteriorating trade relationship.
By comparison, economic expectations for the next six months in Europe and South America have worsened dramatically, as you can see by looking at the main chart. Economic expectations for the eurozone have fallen to levels since 2012, but stocks have lagged behind at a high level.
Here we have to pay attention to divergence by being more cautious with the purchase of European shares. If Sentix expectations over the next six months are confirmed, the correction of European indexes will be inevitable. Given the policy of Donald Trump, which literally every day puts more weight on US trading partners, I expect European economic indicators to worsen, and consequently the indices to reflect it negatively.
Source: Bloomberg Pro Terminal
Chart: Used with permission of Bloomberg Finance L.P.
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