European equity markets hit a periodic peak last week which was an impressive 11 percent above recent lows. Unfortunately, 2018 has turned into a rollercoaster ride, often on geopolitical incidents rather than economics.

All time-high prices touched briefly in January slid aggressively into February and touched bottom in March. At this point the European benchmark was 12 percent below the January highs; the global synchronised economic growth hypothesis shattered.

Satisfactory earnings results and a change in tone from the US regarding international trade was followed by sustained positive performance throughout April and most of May, reaching a peak last week. Then the ride went downhill again.

Geopolitical issues once more dominate with renewed trade worries out of the US, the cancellation of the North Korean summit and rising angst around the formation of a populist coalition government in Italy.

Trump was not particularly pleased with the outcome of US-China trade talks in the last two weeks and has threatened China once more with trade tariffs. These threats come days ahead of a planned visit by US Commerce Secretary Wilbur Ross to China. Obviously China expressed its surprise at the unexpected change in tone and urged the US to keep its promises.

The tougher stance comes as President Donald Trump prepares for a ‘cancelled’ summit with North Korean leader Kim Jong-Un, who is backed by China, and after the two sides have already agreed this month to find steps to narrow the trade imbalance that exists between them. The US appears to be insisting that China sticks to firm agreed numbers, something which China probably finds implausible.

The Trump-Kim summit is currently off the table; what a pity! Mention of the Libyan model apparently was insulting towards Kim Jung-un; understandably he does not want the summit to be a prelude towards his demise. This does not imply that war is now imminent. The North Korean regime knows that it will get annihilated if it does anything and the US knows that a pre-emptive strike will result in mass casualties in South Korea.

Surprise meetings between the two Korean leaders have reignited hope that a summit will in fact happen. North Korea is economically desperate and Donald Trump needs something to show ahead of US mid-term elections.

Meanwhile Europe has got itself into a crisis once more. Investors are worried that an eventual populist government in Italy will blow the Italian budget deficit through the EU limit of 3% of GDP leading to conflict with the EU, sanctions, the ECB excluding it from its bond buying program and ratings agency downgrades.

The latest news is that 5star are making a last ditch attempt at forming a political government that would end the three month stalemate. The two populist parties, 5Star and the League, had abandoned coalition plans after Italy’s head of state blocked the appointment of a hard-line Eurosceptic as economy minister. At the time of writing the parties are trying to find a compromise or another person for the economy ministry. Hopefully by the time that this article goes to print common sense would have prevailed.