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Global equity markets reversed May’s heavy losses as central bankers took on a dovish tone in light of slowing global growth and trade tensions.

All major equity markets staged a major rebound in May with the S&P 500 Index climbing 6.9% month-on-month. This was the S&P’s best June performance since 1955.

Global markets have been boosted largely by the expectation of interest rates cuts or even further stimulus measures by the US Federal Reserve and the European Central Bank. ECB head Mario Draghi said in a speech that if the region’s economy slows and the ECB’s inflation target is threatened, “additional stimulus will be required.” He cited the threat of trade protectionism as one of the key factors weighing on exports and manufacturing.

Trade remains the biggest source of uncertainty looming over global markets. US President Donald Trump and China’s Xi Jinping met over the weekend on the sidelines of the G-20 summit in Osaka, Japan. In possibly the most highly anticipated meeting of the year, the two leaders agreed to a cease-fire in their yearlong trade war, averting an escalation. Existing US tariffs would remain in place against Chinese imports while negotiations continue, but additional tariffs would not be triggered for the time being.

As part of the trade truce, Trump said the US would ease restrictions on China’s most prominent technology company Huawei. US companies will once again be allowed to supply products to Huawei Technologies.

The US has so far imposed 25% import tariffs on $250 billion in Chinese products and is threatening to target another $300 billion. That would extend the tariffs to virtually everything China exports to the US. China has responded with tariffs on $110 billion in American goods, focusing on agricultural products which hit at Trump supporters in the US farm belt.

Doubts persist about the two nations’ willingness to compromise on a long-term solution despite the desperate need to avoid the repercussions of a drawn-out trade war. China is concerned that US firms will outsource their supply chains to other Asian countries, an outcome which has already begun. For Trump, his re-election chances have been put at risk by a trade war that has hurt American farmers and battered global markets.

GLOBAL INDICATORS: Local reporting currencies