Please find this week’s edition of Weekly Digest attached.
Last week saw positive sentiment on trade talks and a forgiving attitude towards Amazon’s earnings shortfall (the stock opened 7% down and rallied to close only 1% lower on the day and are up 0.7% today as I type) drive the S&P Composite to 3023, a whisker away from its record high of 3026 on 26th July. Global equities rose by 1.7% in sterling for the week, 1.2% of which was due to sterling weakening as the initial delight that an end to Brexit uncertainty could be in sight gave way to a realisation that, although we appear to be moving towards a conclusion, the outcome (stay or go) still remains unclear. US equities again led, rising by 2.4% in Sterling. The Yuan Dollar closed at CNY/$ 7.07, holding below 7.10 and suggestive of diminishing trade tensions.
Asian markets were generally firmer today, encouraged by the reported direction of trade talks and buoyed by strong momentum in Chinese technology names on the back of a speech by Xi Jinping endorsing blockchain development in China. For those who equate blockchain with crypto-currencies, this could be seen as a warning shot in the economic power struggle between the US and China, since a non-dollar blockchain-based crypto-currency would sidestep the systems that enable the US to monitor much of the world’s financial activity. Elsewhere, the general election in Argentina has, as expected, returned the fiscally liberal Peronists to power.
Brexit was again the top financial news story today as the European Council granted the UK an extension of Article 50 to January 31st 2020. France was apparently most reluctant to agree to this, believing that a further extension would have to embrace a general election to break the logjam once and for all. A conversation between Boris Johnson and Emmanuel Macron is reported to have convinced the French president that this is inevitable. A proposal to deliver an election on Thursday 12th December, following full debate of the Withdrawal Agreement on November 6th, has been tabled by the Conservative government today. This will require a 2/3 majority, but is unlikely to pass.
This week is a busy one for economic data, policy announcements and corporate earnings. The US Federal Reserve is expected to deliver a 0.25% interest rate reduction on Wednesday, with US GDP economic output data released the same day. This is followed by a Bank of Japan policy meeting on Thursday which coincides with the release of Euro Area GDP, inflation and unemployment data. This week also sees corporate updates from BP, Next, Glaxosmithkline, Facebook, Apple and Royal Dutch Shell among others.