European shares extended yesterday’s global gains after the two largest economies in the world buoyed market sentiment with an agreement to roll back tariffs on each other’s goods prior to a phase one deal. Investors have welcomed the progress and constructive discussions getting Washington and Beijing closer and closer to a deal and with it the possibility of more tariffs being annulled.
With a potential US-China trade agreement in sight, data showing robust recovery in Europe and easing fears towards a global recession, the planets seem to be well aligned for bull traders. However, even if there is still room for an extended rally on stocks until the end of the year, investors may want to bear in mind that the current state of euphoria could lead to bullish excesses as well as sharp and dangerous corrective moves from one day to another, as long as we have no material evidence of a final US-China trade deal.
