Trade war, US-Korean diplomacy to decide market stability

US stocks finished last week slightly higher as investors celebrated strong jobs growth and ignored the outbreak of a trade war. That stability, however, looks likely to be short-lived.

This week, any further exchange of fire in the trade war or any deterioration in US-South Korean diplomacy could overshadow strong earnings reports from banks and others.

As so often happens, the stock market digested the future before it even materialised. In mid-June, the US vowed to impose tariffs on US$34 billion of Chinese goods and Beijing immediately vowed to reciprocate.