In early March, it seemed that calm returned to the markets. The economy in both the US and other developed countries remains strong enough, but not so much to provoke a rapid increase in lending rates. In addition, companies and analysts at all believed how much money they would save by reducing taxes in the US. In other words, the situation was quite favorable for the markets so far the word "trade war" did not loom in all the headlines of the business press. The US and China exchanged several rounds of introducing new import duties and not very friendly statements. And although the real economic damage from these duties is not so much significant, the markets are frightened by the possibility of further escalation and the fact that it is easy to start a trade war, but not just finish it. After all the fluctuations at the end of March, the S & P 500 index shows a result of -0.8% since the beginning of the year, which roughly reflects the picture in other major markets. The UX index, meanwhile, does not stop to stop and added + 7.5% (+ 22% YTD) in March, even in spite of the lack of noticeable progress in cooperation with the IMF.
We believe that the trade war between the US and China is so far more a news noise than a real direct threat to financial markets and the global economy. In addition, fiscal stimulus (tax cuts for corporations) will not exactly give the US economy this year to significantly slow down. Moreover, the lion's share of the saved taxes will probably be used by companies to increase dividends or buy back their shares, which is also extremely positive for the stock market. Because we still expect a strong year for the stock markets. For Ukraine, the baseline scenario remains unchanged: the continuation of a relatively slow economic recovery and the resumption of cooperation with the IMF. Such a long pause in the trenches of the IMF is of course alarming, but the situation so far is far from critical and time to take the necessary steps (in particular, to pass a law on an independent anti-corruption court) is still in Ukraine.
