Weekly Digest - INVESTEC
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US and European markets closed fractionally lower last week after the release of mixed global manufacturing data, with European readings doing better than expected but the US falling to a post-crisis low. Tensions remained high in the Gulf, sending Brent crude oil up by 5.4% over the course of the week. Emerging Market equities outperformed, taking some encouragement from the softer tone of the Federal Reserve’s latest policy statement. At the same time as the S&P 500 made new highs on Thursday, gold advanced 4.3% over the week to its highest level in five years. US Treasuries were also firmer, with the ten-year yield falling to 2.05%.
Politics continued to dominate the weekend headlines. Turkey saw victory for Ekrem Imamoglu, the challenger to President Erdogan, in the re-run of the mayoral election of Istanbul. Elsewhere in Europe, the pressure on Italy may be alleviated for the time being as it is reported that the European Commission will not formally trigger its excessive deficit procedure during its meeting tomorrow. This week, all eyes are focused on the G-20 summit on Friday and Saturday. Presidents Trump & Xi are due to meet, but reading the signs ahead of the meeting is proving difficult. On the positive side, VP Pence has had a hostile speech postponed once again, suggesting that progress is being made between the two countries. On the negative side, the Trump administration added five more Chinese tech firms to the trade blacklist over the weekend. With tariffs on $300bn of Chinese goods scheduled to be implemented if no further progress is made, the stakes are high. Global trade is already suffering from the tensions.
This week in the US, we have the latest GDP data on Thursday followed by the latest inflation report on Friday. In addition, the twenty contenders for the Democrat Presidential nomination will be whittled down after their primary debates on Wednesday and Thursday. In the UK, we have the Bank of England testifying before the Treasury Committee on the May inflation report.