MARKET UPDATE: TRUMP CONSIDERS EXTENDING TRADE DEADLINE

LAST WEEK – KEY TAKEAWAYS

US: TRUMP MAY EXTEND TRADE DEADLINE

• US equities rallied as President Trump hinted that he might be prepared to extend the deadline for trade talks with China;
• Officials agreed to continue negotiations in Washington DC this week;
• Meanwhile, President Trump signed a bill jointly proposed by Democrats and Republicans to avoid another government shutdown, although he declared a national emergency to secure funding for his wall along the Mexican border.
• Omnis view: President Trump has pledged to increase tariffs on Chinese goods if the two sides do not reach an agreement by 1st March, so the markets should welcome his apparent willingness to allow more time for negotiations.

Performance of the S&P 500 for the week commencing 11th February 2019 (source: ft.com)

UK ECONOMY: GROWTH WEIGHS ON STERLING

• Sterling weakened against the US dollar as figures released by the Office for National Statistics showed the UK economy grew by 1.4% in 2018, the slowest level since the financial crisis .
• Omnis view: While it was a relatively quiet week in terms of Brexit, continued uncertainty about when and how the UK will leave the EU also weighed on sterling.

US ECONOMY: INFLATION HOLDS STEADY

• Data released by the US Bureau of Labor Statistics showed that annual inflation did not change between December and January.
• Omnis view: US inflation remains within touching distance of the Federal Reserve’s target of 2%, supporting its recently-adopted stance on taking a patient approach to raising interest rates.

COMMODITIES: PRODUCTION CUTS BOOST OIL PRICES

• Oil prices rallied as production cuts by the Organisation of Petroleum Exporting Countries (OPEC) started to take effect, and Saudi Arabia pledged further reductions in March.
• Omnis view: Oil prices benefit from easing trade tensions and act as a catalyst for energy-heavy indices like the FTSE 100.

LOOKING AHEAD – TALKING POINTS

ECONOMIC DATA RELEASES

• Tuesday- UK’s unemployment rate for December; Japanese import, export and balance of trade data for January;
• Thursday- Japanese inflation rate for January.

BREXIT

• The Prime Minister Theresa May heads to Brussels as she attempts to negotiate a compromise on the Irish backstop.

CORPORATE EARNINGS

• Lloyds and Barclays are among UK companies reporting earnings.

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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.