Stock markets rose mildly in most trading floors while yields on sovereign bonds edged up in the US and declined in the euro area (the German Bund reached a new minimum yielding -0.58%).
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After the risk-off session of Monday, triggered by the depreciation of the Chinese yuan above the 7 yuans per US dollar threshold, financial markets' volatility moderated and stock indices edged down in Europe and rose in the US.
Financial markets buckled on Monday after China let its yuan weaken below 7 to the dollar, an 11 year low, adding to broad risk aversion on concerns about the escalation of the US – China trade tensions.
Escalating trade tensions between the US and China worsened investor sentiment and motivated safe-haven flows in the last session of the week.
Trade concerns returned to financial markets' center stage as Donald Trump announced that the US will impose 10% tariffs on the remaining $300 billion Chinese imports, starting on September 1st.
Yesterday, Fed's 25 bp interest rate cut and the economic releases in Europe took center stage.
Stock markets decreased across the globe as investors perceived that trade talks between the US and China made very little progress.
In the first session of the week, investors traded cautiously as they await for the Federal Reserve monetary policy decision on Wednesday and for news on the trade talks.
In the last session of the week, stock indices rose in the US and core euro area following positive corporate results and the better-than-expected GDP growth figures in the US.
In yesterday session, stock indices declined in the US, after several weak Q2 corporate results, and in Europe, after Draghi missed market expectations since they expected a more dovish press conference.
The main drivers of yesterday's session were corporate earnings releases and weak economic sentiment data in Europe.
Investor sentiment improved on the back of relatively positive earnings releases in Europe and in the US.
Financial markets started the week in a cautious mood as investors await for the ECB monetary policy meeting on Thursday and for more Q2 earnings releases.
As July's main central banks meetings are getting closer, monetary policy is taking center stage in financial markets.
The resumption in trade negotiations between China and US boosted stock indices across the globe at the beginning of yesterday's session.
In yesterday session, trading volumes were well below average as US financial markets were closed due to the Independence Day.
Investor sentiment improved in yesterday's session with the expectation of an extension of the accommodative monetary policy stance. Analysts expect Christine Lagarde to follow Mario Draghi's approach and provide monetary stimulus in the coming quarters.
In yesterday's session, investors traded in a cautious mood and demand for safe haven assets increased.
Yesterday, investors traded cautiously ahead of the eagerly anticipated U.S.-China meeting on Saturday and amid mixed messages from the U.S. Administration regarding trade negotiations.
Stocks were erratic and safe-haven flows eased in yesterday's session as investors weighed mixed messages on trade.