Market Update: Global shares rise as tensions ease between US and Iran

Market Update: Global shares rise as tensions ease between US and Iran

13th January 2020

LAST WEEK – KEY TAkeAways

Middle East: Shares rise as Iran backs off

  • Global shares rose as tensions eased between the US and Iran after the US assassinated a top Iranian general on Friday 3rd January;
  • US President Donald Trump claimed Iran appeared to be ‘standing down’ after launching limited missile attacks on US military bases in Iraq;
  • Omnis view: The threat of escalation seems to have diminished as Iran deals with anti-regime protests following the downing of a Ukrainian passenger jet by the Revolutionary Guards. We would not rule out further confrontation between the US and Iran in the coming months, but for now they seem to have drawn a line under events with the offer of talks.

US: Labour market falls short in December

  • US shares handed back some of the gains from earlier in the week after the non-farm payroll report showed the country’s economy created fewer new jobs than expected in December.
  • Omnis view: Wage growth also slowed, but unemployment remains at historic lows, so the Federal Reserve- the US central bank- is unlikely to change its mind about leaving interest rates unchanged in 2020 for the time being.

UK: Bank of England governor suggests economy may need support

  • Sterling weakened against the US dollar as the governor of the Bank of England (BoE) suggested it may have to take action to support the short-term recovery of the UK economy.
  • Omnis view: Whether the BoE lowers interest rates depends on how quickly consumer confidence returns, which will be influenced by progress made by the UK and the EU on a free trade deal.

Europe: Strong end to 2019 for economy

  • There was good news for the EU economy in December as business activity increased and consumer spending in the run- up to Christmas boosted inflation (the rate at which prices rise).
  • Omnis view: The European Central Bank will welcome signs that the region’s economy is strengthening as it eases pressure to lower interest rates, which are already negative, any further.

LOOKING AHEAD - TALKING POINTS

Economic data (NB all regions)

  • Monday- UK economic growth in November;
  • Tuesday- Chinese imports, exports and balance of trade in December; US inflation rate in December;
  • Wednesday- UK inflation rate in December;
  • Friday- Chinese economic growth in the fourth quarter; EU inflation rate in December.

Trade

  • President Trump is due to meet senior Chinese officials at the White House on Wednesday to sign the first phase of a trade deal.

Corporate earnings

  • US banks JP Morgan, Morgan Stanley and Wells Fargo are among the first companies to report profits for the fourth quarter of 2019 this week.

 

DOWNLOAD THE WEEKLY UPDATE AS A PDF FOR USE WITH YOUR CLIENTS »

Omnis Investments is now tweeting daily updates. Follow us at: @OmnisInvest

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.