US markets were mixed on Friday but positive for the week, as investors continued to weigh developments on the global stage.

For the moment, investors are taking a sanguine approach as many of the threatened tariffs are in abeyance for the time being, leaving the door ajar for negotiations which could result in less punitive measures than had been initially feared. By the same token, this leaves some vulnerability given that disappointment could be around the corner if any or all of the measures are introduced, with the possibility of self-inflicted wounds for the US economy which could result from something of a global trade war.

In the meantime, as the reporting season begins to wind down, the general performance of companies has exceeded expectations, providing a buffer to any economic worries. As a result, the weaker-than-expected number on Friday was largely discounted, as a 0.9% decline for January compared to estimates of a 0.2% decline. Some further colour could be provided following Walmart’s (NYSE:) update this week, while the upcoming Personal Expenditures index, the preferred measure of inflation, will shed further light on the inflationary position after softer and readings last week.

A shortened trading week due to markets today being closed for Presidents’ Day will remove some volatility, albeit temporarily. Meanwhile, the main indices remain ahead in the year to date, with gains of 4.7% for the , 4% for the and 3.7% for the .

Asian markets were mixed to lower overnight, with the tariff clouds continuing to weigh on sentiment. The fractious Sino-American relationship continues with reciprocal measures already being in force, with neither side apparently willing to blink first in something of a tit-for-tat situation.

In Japan, the gave up earlier gains after initially reacting positively to an economic growth reading of 2.8% between October and December which exceeded expectations. The news strengthened the yen, which immediately impacted the equity index given its large exposure to exporters, while also underlining the concerns that tariffs could have on an otherwise growing economy.

UK markets began the week quietly, ahead of a busy few days which will herald inflationary and consumer updates in the form of the Retail, Consumer and Producer Price Indices as well as retail sales, employment numbers and public sector borrowing figures. On the corporate front, the remainder of the UK banks will provide full-year numbers following results from (LON:) and (LON:) last week which were strong in nature but poorly received in equal measure.

Ahead of its full-year numbers and amid a continually uncertain geopolitical backdrop, BAE Systems (LON:) shares rose by more than 5%, lifting the price by a cumulative 12% so far this year. The possibility of increased military spending has underpinned the sector for some time, with the group being one of the preferred plays in the meantime, with Rolls-Royce (LON:) also seeing the renewed interest lifting its shares by almost 2% and building on a gain of more than 90% over the last year. The early and cautious advances for the indices as a whole leaves the ahead by 7% and the FTSE250 by 1.8% in the year to date, with interest in the UK as an investment destination appearing to be increasing incrementally.