MARKET UPDATE: US EQUITIES FALTER AS TRADE TENSIONS ESCALATE

LAST WEEK – KEY TAKEAWAYS

TRADE: US RAISES TARIFFS ON CHINESE GOODS

• US equities fell as President Trump followed through on his pledge to increase trade tariffs on $200 billion of Chinese goods;
• There were mixed messages from President Trump throughout the week, but equities recovered after he described the latest round of talks, which concluded on Friday, as ‘candid and constructive’.
• Omnis view: The Chinese vowed to hit back, although the new tariffs only apply to goods shipped from Friday, so the two sides still have a short window to agree a deal.

UK: PRIME MINISTER PLANS FOURTH VOTE ON HER DEAL

• Media reports suggested the Prime Minister is planning to hold a fourth vote on her Brexit withdrawal deal as she attempts to break the deadlock before the European elections on 23rd May;
• Meanwhile, the UK economy grew by 0.5% in the first quarter of 2019, driven by stockpiling ahead of the original Article 50 deadline of 29th March .
• Omnis view: Parliament is unlikely to back Mrs May’s deal. Instead, she will have to reach a compromise with the Labour party that would probably include committing to a referendum on the deal.

UK gross domestic product (GDP) growth rate

EUROPE: GERMAN EXPORTS PICK UP IN MARCH

• European equities briefly rallied at the end of the week as the Federal Statistics Office reported that German exports unexpectedly rose in March, comfortably beating forecasts.
• Omnis view: Germany is considered Europe’s ‘engine’, so any good news about its economy should boost sentiment towards the EU as a whole.

LOOKING AHEAD – TALKING POINTS

ECONOMIC DATA

• Tuesday- UK unemployment rate and wage growth for March;
• Thursday- EU balance of trade for March.

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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.