US equities rally lifts global markets while trade tensions escalate

US stocks rallied on positive data leading global markets higher last week despite US-Sino trade tensions escalation. Clearly optimism about US economic health supported by upbeat corporate performance and more positive data outweighed trade war concerns as President Trump restated the US had no choice but to impose tariffs on imports from China.

The SP 500 extended gains 0.9% last week while the ICE dollar index extended losses 0.8%. The broad US stock market index advanced every session last week except Monday and Friday, booking the biggest gain of 0.8% on Thursday as the Philadelphia Fed manufacturing index jumped more than expected in September, rising to 22.9 from 11.9 in August.

The dollar weakened every session last week except Tuesday and Friday. The ICE dollar index fell 0.7% Thursday as the UK Pound and euro rallied after surprise UK retail sales gain of 0.3% in August instead of an expected 0.2% decline.

Trade war developments after China canceled trade talks with US after President Trump announced new tariffs on $200 billion in Chinese imports and vowed to further impose tariffs on another $257 billion are bound to remain in the focus this week too. And investors will be watching closely interest rate decisions by the Federal Reserve and Reserve Bank of New Zealand on Wednesday. While markets view a third quarter point rate hike by the Fed a virtual certainty the focus will be on any signal the central bank might be considering not raising rates fourth time this year in light of escalating US-Sino trade war.