LAST WEEK – KEY TAKEAWAYS
Trade: US and China swap further tariffs
- Global shares fell after China imposed trade tariffs- taxes on companies importing products from abroad- on another US$75 billion worth of US goods from September;
- These tariffs are a somewhat delayed reaction to the latest round of US tariffs due to come into effect at the same time;
- In response, US President Donald Trump said he would raise existing tariffs on US$250 billion of Chinese goods and pending tariffs on US$300 billion of goods.
Omnis view: US officials expect trade talks with China to go ahead next month despite this escalation of tensions, although what the two sides can achieve remains to be seen.
UK: Sterling sensitive to Brexit developments
- Sterling weakened against the US dollar as the EU rejected an appeal by Prime Minister Boris Johnson to revise the draft Brexit withdrawal deal negotiated by his predecessor;
- Boris wants to remove the Irish backstop- an insurance policy to avoid a hard border between Northern Ireland and the Republic- but Donald Tusk, President of the European Council, countered that the UK could not offer any alternatives;
- However, sterling recovered later in the week after German Chancellor Angela Merkel suggested the UK and the EU could agree a deal ahead of the Article 50 deadline on 31st October.
Omnis view: Boris met with Mrs Merkel and French President Emmanuel Macron last week and while there were no concrete outcomes, all parties expressed optimism that a deal could be agreed to avoid a hard Brexit.
LOOKING AHEAD - TALKING POINTS
- Thursday- US economic growth in the second quarter of 2019;
- Friday- Japanese unemployment rate in July, EU unemployment rate in July.
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.