LAST WEEK – KEY TAKEAWAYS
MONETARY POLICY: CENTRAL BANKS KEEP RATES ON HOLD
• The S&P 500 hit a record high after the Federal Reserve left interest rates unchanged at its latest meeting and hinted at a rate cut in 2020 due to an uncertain economic outlook;
• The Bank of England also decided against changing rates and maintained its guidance that future hikes may be required at a ‘gradual pace and to a limited extent’;
• Meanwhile, the president of the European Central Bank (ECB) claimed it was prepared to expand its quantitative easing programme if inflation remains subdued.
• Omnis view: Equity markets should welcome the dovish tone adopted by the Fed and the ECB, although the forecast for the global economy may cause some concern.
Performance of the S&P 500 for the week commencing 17th June 2019 (source: ft.com)
UK: TORY LEADERSHIP CONTEST WEIGHS ON STERLING
• Political uncertainty caused by the Conservative leadership contest weighed on sterling at the start of the week as it fell to an annual low against the US dollar.
• Omnis view: Brexiter Boris Johnson comfortably won each round of voting by Tory MPs and remains the favourite to succeed Theresa May when party members choose a new leader in July.
TRADE: TRUMP AND XI CONFIRM TALKS AT G20 SUMMIT
• There was further good news for global equities when US President Donald Trump and his Chinese counterpart Xi Jinping agreed to hold an extended meeting at the G20 summit which starts on Friday.
• Omnis view: US trade representative Robert Lightizer acknowledged that it was in both sides’ best interest to find a resolution, but it remains to be seen if the two leaders can reach an agreement on the structural issues which have been holding up progress to date.
LOOKING AHEAD – TALKING POINTS
• Friday- Japanese unemployment rate in May.
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This update reflects Omnis’ view at the time of writing and is subject to change.
The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your Openwork financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given.