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It has been an important week for UK data. UK CPI inflation slowed again in December to 1.3% from 1.5% – its lowest rate since November 2016 and well below the BoE’s mandate which is to target inflation at 2%.
It turns out US/Iran tensions was just a lot of noise! We had a miserable start to the week as global equity markets fell after the weekend saw Middle East tensions escalate.
Global equity markets started 2020 on a happy note after Donald Trump said he will sign the first phase of the US/China trade deal on Wednesday 15 January 2020, coupled with news that the Chinese central bank, the PBOC, was reducing the required reserve ratio (RRR) by 50 basis points (which underscores our view that the world’s major central banks remain easing-biased).
The get Brexit done mantra is proving as popular with UK equities as it did with British voters as the post-election euphoria continued, making the FTSE-100 one of the best performing indices over the week.
Following a substantial Conservative victory in the UK elections, it was a clear vote by the British public that a vote for Brexit meant they want Brexit! This win secured Prime Minister, Boris Johnson, the mandate to press ahead and deliver it.
In the penultimate week of the UK election campaign trail, following a somewhat stagnant television debate on Sunday (which Boris Johnson and Jeremy Corbyn did not attend), it was no surprise to see Labour leader, Jeremy Corbyn, target the NHS as a key battleground in this election early in the week.
It was another week of mixed trade messages. Global equity markets started the week on a positive note amid optimism that the first phase of a US/China trade deal would shortly be agreed after China said it would tighten intellectual property rules (this is what the US has been pushing for).
US/China trade talks continued to dominate global equity market sentiment. The week started positively after it was signalled that the US and China were edging towards an initial trade agreement (phase 1), following constructive discussions between China’s Vice-Premier Liu He, US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin.
Positive news flow from US-China trade talks resulted in another positive week for global equity markets.
