Please click here to read the Weekly Digest which this week considers why we do not believe a global stock market crash is imminent.
Last week was another positive one for risk assets. Politics has been centre stage over the weekend and will remain so this week. In the US, President Trump now seems to have picked a fight with his own international allies by de-certifying the 2015 nuclear deal with Iran, a move that has attracted criticism from the UK, Germany and others and which may complicate effort to defuse tension over the Korean peninsula. In elections over the weekend the right-wing FPO (Freedom Party of Austria) party in Austria seems likely to be back in government for the first time since 2005, in coalition with the centre-right OVP (Austrian People’s Party) which has attracted media attention primarily because of the youth of its leader (he is 31). The FPO is euro-sceptic and anti-immigration, and its relative success suggests there is still a significant body of support for populism on the continent. Meanwhile in Germany, Angela Merkel’s CDU (Christian Democratic Union) experienced its worst result since 1959 in regional elections in Lower Saxony, which may damage her authority despite recently securing re-election at a national level. In Catalonia, the deadline has passed for the Catalan leader Carles Puigdemont to clarify whether he has declared independence. If he has, he has until Thursday to withdraw the declaration or face direct rule for Catalonia from Madrid. This morning Mr Puigdemeont published a letter calling for a meeting with Prime Minister Rajoy and again asserting Catalonia’s right to self-determination, but without making it clear whether he has in fact declared independence.
This week, Brexit will again be a focus of attention, culminating in an EU summit on Thursday at which Theresa May is expected to address the issue of the financial settlement that is one of the stumbling blocks to moving on to talk about trade. Mrs May spoke to Angela Merkel at the weekend and is travelling to Brussels today to meet Mr Barnier and Mr Juncker, in what looks like a concerted effort to get things moving. There are, however, reports that France and Germany are seeking to remove references in a draft EU paper to the possibility of soon moving on to trade talks, which may suggest any optimism is premature. As usual in the financial markets the main indicator of sentiment around the talks will be the performance of sterling.
Corporate reporting picks up steam this week, with 23 of our favoured names across the UK, Europe and US releasing results, including Reckitt Benckiser, Unilever, UnitedHealth, Merlin Entertainments, Zalando and Schlumberger.
Away from markets, as I mentioned over the Summer, we are pleased to once again be hosting a Homestart Christmas Carol Concert. It is to be held on Wednesday 13 December at St Giles Cripplegate Church, followed by a Christmas Drinks Reception at Salters’ Hall. It is an enjoyable evening and also a good opportunity to see some other members of the team in which I work. I am pleased that I already have around thirty guests attending. If you have not received an email from me earlier today on this theme, I do not know that you are coming, so please let me know asap if you would like to join me.