The Weekly Note is brought to you by the ALPHA: r² discretionary service team.
Global equities have rallied since the weekend after the US Department of Commerce extended the grace period during which Huawei can continue to trade with American companies. Relaxing restrictions on the controversial Chinese company is perceived as a conciliatory gesture from the US ahead of the two superpowers' trade talks next month.
Markets have also been influenced by Donald Trump's pressuring of the Federal Reserve. The President said that the central bank should cut interest rates by “at least 100 basis points, with perhaps some quantitative easing as well”. The S&P 500 closed up 1.2% yesterday and the FTSE 100 rose 1.1%, with French and German headline indices moving in line.
Investor optimism yesterday was in stark contrast to last week's mood. Last Wednesday, Wall Street fell around 3% after a spate of negative economic stories coincided with inversions in the US and UK yield curves, moves which have historically pointed towards recession. China's industrial output dropped to its lowest rate of growth in July for 17 years; UK inflation moved above 2% in July, making it harder for the Bank of England to justify a rate cut; and Germany revealed that its GDP shrank by 0.1% in the second quarter.
Since then, Germany's central bank warned that the economy is likely to shrink this quarter as well, which would put Europe's largest economy into recession. The country's manufacturing sector has struggled with a slowdown in global growth and the trade war.
In a letter to Donald Tusk, President of the European Council, Boris Johnson has demanded that the Irish backstop must be scrapped because it is “anti-democratic” and would undermine the Northern Irish peace process. The Prime Minister advocates the use of technology to avoid a hard border and says he still hopes to leave the EU with a deal.
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.