Domestic equity markets shook off concerns about Italy’s political chaos and a trade war with European and North American allies, ending the week higher. This was further boosted by Friday’s strong employment report.

Global equity markets were rattled on Tuesday after Italy’s president rejected the formation of a Eurosceptic coalition government, raising the possibility of new elections. In response, investors bid up safe-haven assets which led to the 10-Year Treasury yield experiencing its largest one-day drop in nearly two years. By week-end, concerns about Italy appeared to have largely dissipated after the president approved a reshuffled cabinet. Fears remain, however, that the new government’s anti-EU stance will lead to increased volatility.

After granting the EU and NAFTA partners Mexico and Canada a reprieve from steel and aluminum tariffs through May, President Trump announced that he would allow tariffs to take effect on Friday, June 1.  In response, the three trading partners announced their own counter-measures. The EU also said it would file a complaint against the U.S. with the World Trade Organization.

In a related move, the president said that he would proceed with tariffs on $50B of Chinese goods. The announcement may have been made to gain leverage in ongoing trade talks. However, the latest round of talks, held over the weekend and led by U.S. Commerce Secretary Wilbur Ross, ended with few visible signs of progress. At the conclusion, Beijing issued a statement saying that any trade and business deals reached with the U.S. would be void if the U.S. went ahead with tariffs.