Asset Allocation for May 2018

In May American and Chinese officials should find a tradeoff in their international relations. Likewise the nuclear program between USA and Iran is to be revised that surely would have an impact on oil prices.

Despite strong 1Q18 earnings (77% of S&P500 companies beaten expectations) American equities don’t grow because of US dollar rebound and uncertainty in US and China business conditions. Declining EU and US macro indicators also became a reason of bearish sentiments.

In Europe STOXX50 index increased by 9% in April on ECB’s chairman Mario Draghi dovish comments that gave the signal of impossibility of rate hike in Eurozone in medium term future. It also caused dramatic drop in EURUSD pricing.

Grain prices continue to show impressive performance in 2018. Traders appraise the situation with wheat and corn harvest in Ukraine and Russia as warm spring could decrease yields. In USA wheat yields are already lower than one year ago.

Threat and challenges in world markets:
- Monetary policy tightening by US FED
- Donald Trump’s protectionist government policy

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