MARKET UPDATE: STERLING FALLS AS PARLIAMENT SUSPENDED
LAST WEEK – KEY TAKEAWAYS
UK: BORIS SUSPENDS PARLIAMENT
- Sterling fell against the US dollar as the Prime Minister Boris Johnson announced Parliament would be suspended for five weeks from the 10th September until 14th October;
- Known as proroguing, this type of suspension is common after a new government is formed, but the timing and the length is controversial on this occasion;
- Boris claimed he needs the time to set out his domestic agenda, while MPs who oppose a ‘no deal’ Brexit worry he is circumventing Parliament to ensure the UK leaves the EU on 31st October.
Omnis view: The suspension of Parliament means MPs have a shorter window and fewer options to prevent what they fear could be a ‘no deal’ Brexit, although it may also put pressure on the EU to make concessions that would secure support for the existing withdrawal deal.
TRADE: TENSIONS EASE BETWEEN US AND CHINA
- US shares rose on Monday after US President Donald Trump claimed China wanted to restart talks and agree a trade deal to bring an end to tensions between the two countries;
- Meanwhile, Chinese vice-premier Liu He said his government opposes any escalation of trade tensions.
Omnis view: The markets welcomed the softening of rhetoric by both sides, but President Trump’s confrontational style of negotiation and his unpredictability suggest a resolution may still be some way off.
LOOKING AHEAD – TALKING POINTS
ECONOMIC DATA
- Wednesday- US imports, exports and balance of trade in July;
- Friday- US non-farm payrolls (job creation) and wage growth in August;
- Sunday- Chinese imports, exports and balance of trade in August;
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.
