Market Update: Trade tensions weigh on Chinese economy

Market Update: Trade tensions weigh on Chinese economy

12th March 2019

LAST WEEK – KEY TAkeAways

China: Exports slow in February 

  • A slowdown in exports in February weighed on Chinese equities at the end of the week.
  • The ECB’s downgrade to growth forecasts (see below) also knocked sentiment towards Chinese equities.
  • Omnis view: Trade tensions are evidently impacting the Chinese economy, as the country’s Premier Li Keqiang acknowledged at the annual National People’s Congress, putting further pressure on Beijing to make a breakthrough in negotiations with the US.

Chinese export data

Europe: ECB downgrades economic outlook

  • European equities weakened as the ECB cut its forecasts for economic growth in 2019 and 2020 and said inflation might not reach its 2% target until 2021.
  • Omnis view: The ECB responded by indicating that interest rates will remain low for the foreseeable future and injecting liquidity into the European banking system.

US: Labour market data misses forecasts

  • US equities fell after the non-farm payroll report, a key measure of job creation, showed the US economy added 20,000 jobs in February, well below expectations.
  • Omnis view: While February’s job data may turn out to be a temporary blip, it should reinforce the Federal Reserve’s patient approach to raising interest rates.

LOOKING AHEAD - TALKING POINTS

Economic data and monetary policy

  • Tuesday- UK GDP and balance of trade data for January; US inflation rate for February;  
  • Friday- Bank of Japan interest rate decision;
  • Sunday- Japanese imports, exports and balance of trade data for February.

Brexit votes

  • Parliament votes on the Prime Minister’s revised Brexit withdrawal deal on Tuesday;
  • If it is defeated, Mrs May will offer MPs a vote on whether the UK should leave the EU without a deal on Wednesday;
  • If MPs rule out a ‘no deal’ Brexit, they will be given the opportunity to vote for an extension to Article 50 on Thursday.

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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.