Weekly Digest - INVESTEC
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The weekend contained two very different political developments, one very positive for markets and the other extending uncertainty. President Trump announced he would be delaying the imposition of higher import tariffs on Chinese imports to the US, citing substantial progress in trade talks. This prompted a spike in Chinese shares, with all their indices sharply higher and the main Shanghai measure closing up more than 5%. Elsewhere in Asia, the tone was much more muted, but there was nonetheless an almost universal increase across the region typically around 0.5%.
By contrast, it appears that Parliament will not vote on Mrs May’s proposal on Wednesday and the PM indicated that there would be a vote by March 12th instead. This followed a joint statement on Saturday by three Cabinet ministers that they could not allow a “no deal” exit. There may be several backbencher amendments selected for voting instead, the threat of which is causing problems for the PM. Whitehall suggestions centred on the UK seeking a two-month extension to March 29th, whereas rumours picked up by Bloomberg indicated a counter-proposal from the EU of conflating any extension into the transition period, thus fixing a “new” deadline date of December 2020. There has been little movement in sterling as a reaction to these developments.
This week we are reaching the end of the US results season; 89% of the S&P constituents have now reported with 72% of them beating consensus and 35% also raising guidance for the year ahead. The final reporting stragglers this week include Anheuser-Busch, EOG, Home Depot and Palo Alto Networks. In the UK, corporate news is due from Standard Chartered, Rio Tinto, CRH and WPP.