With some US markets closed for the Veterans Day holiday last Monday, the first main event of last week was Tuesday’s speech by US President Trump at the Economic Club of New York. Trump delivered a positive view on a US-China trade deal, but also threatened further tariffs if no deal was made. This caused global stocks to dip lower Wednesday.
Late on Thursday then saw comments from Larry Kudlow, the White House economic advisor that a deal with China was close. This propelled US share indices (including the Dow and S&P 500), to new all-time highs on Friday, with some European stock averages close to multi-month highs.
Between these events Jerome Powell, the Fed Chairman testified to Congress on Wednesday and Thursday, where he retained his positive view on the US economy, though did not indicate the future path for interest rates.
The main development in the UK was political, with the Brexit Party standing down candidates in all the constituencies that were won in 2017 by the Conservatives, then going further by not contesting 38 other marginal seats that the Tories have a chance of winning.
This has increased the possibility the Conservatives could achieve a majority government, which has been evidenced by opinion polls. Polls over the past week have indicated a 10-point lead for the Conservatives over Labour, with the most recent poll (from Panelbase) seeing this lead now at 13-points.
This information has encouraged a stronger Pound, with EURGBP moving to its lowest level for six months and seen the FTSE 100 underperform European and US stock averages (due to the negative impact of the Pound strengthening).
In Hong Kong, demonstrations and the response from the authorities have escalated to seeing more acute violent than previously understood, which has at times in the past week prompted some modest weakness in Asian (and global) share markets.
The Trump impeachment enquiry has now moved into the public domain, and although this has yet to have any important financial market repercussions, we continue to believe this process could have a noteworthy sway on US (and global) markets later this year, and into 2020.
What to Watch
Geopolitical factors to monitor remain the US-China trade talks, the UK election and polls, the heightened stresses in Hong Kong and the US impeachment hearings.
On the Central Bank front, we get Reserve Bank of Australia (RBA) Minutes Tuesday, the People’s Bank of China (PBoC) interest rate decision and the release of the FOMC Meeting Minutes from October both on Wednesday.
Data is very light with spotlight on Friday’s Japanese Consumer Price Index (CPI), German GDP and global Purchasing Managers Index (PMI).
|18th November||Nothing significant|
|19th November||Reserve Bank of Australia Meeting Minutes|
|20th November||PBoC interest rate decision; Canadian CPI; FOMC Meeting Minutes|
|21st November||Nothing significant|
|22nd November||Japanese CPI; German GDP; global PMI data|