The Weekly Note is brought to you by the ALPHA: r² discretionary service team.
Major equity markets are trading higher today following broad gains in Asia, as the US eased some of the restrictions it imposed last week on Huawei, the Chinese technology company that Western countries are increasingly viewing as a threat to national security. Washington will now allow Huawei to buy American goods in order to support existing, but not new, networks and handsets.
Last week, a deterioration in US-China trade talks sparked volatility which started with the S&P 500’s worst one-day fall this year. US stocks only partially recovered amid more verbal sparring, with both sides claiming they are willing to persist with tariffs and counter-tariffs despite the damaging effects on the global economy.
China’s own economy showed signs of weakness last week. The annual growth of industrial production in April fell from 8.5% to 5.4% and retail sales hit a 16-year low at 7.2% year-on-year. Both readings were below consensus and mark a shift in momentum after government stimulus supercharged the economy in the first quarter.
The risk-off attitude helped US Treasuries rally, while the dollar index rose 0.8% last week and is closing in on a two-year high. American industrial production, however, fell 0.5% between March and April.
Sterling fell 2.2% against the dollar last week as dollar strength was compounded by a breakdown in Brexit compromise talks between the Conservative and Labour parties. Ahead of the vote on Theresa May’s Brexit deal next month, the latest reports suggest the Prime Minister is prepared to offer more concessions to Labour, but potential successors have upped their efforts in anticipation of May’s agreement failing again. Boris Johnson is currently the clear favourite.
Elsewhere, Japan’s unexpected jump in first quarter economic growth is likely to confirm the planned increase in consumption tax that is due in October. GDP rose at an annualised 2.1% in the first three months of the year, while consumption tax is due to rise from 8% to 10%.
Subscribe today and email [email protected] to register your interest, and receive the full Weekly Note in your inbox every Tuesday.
Old Change House
128 Queen Victoria Street
London EC4V 4BJ
020 3100 8000
This publication is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a
transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips.
Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Registered office: Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ. Registered in England number 4774117.
No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.
Investors should be aware that past performance is not a reliable indicator of future results and that the price of shares and other investments, may fall as well as rise and the amount realised may be less than the original sum invested.
Walker Crips Group plc (Old Change House, 128 Queen Victoria Street, London EC4V 4BJ), registered in England, registered number 1432059, incorporates the following companies which are authorised and regulated by the Financial Conduct Authority: Walker Crips Investment Management Limited registered in England number 4774117 member of the London Stock Exchange, Walker Crips Wealth Management Limited registered in England number 3790291, Ebor Trustees Limited registered in England number 3514268, Barker Poland Asset Management LLP registered in England and Wales number OC341149.