Weekly Blog 08/02/2019

Mike BaxterWeekly Blog0 Comments

The Bank of England has performed a dovish U-turn, much like the Federal Reserve, after signalling that interest rates would remain on hold, following concerns that the economy is weakening ahead of the UK leaving the E.U. With continued Brexit-related uncertainty, and a loss of momentum in the global economy, the central bank has forecast the slowest rate of growth since the financial crisis in 2009.

In our ‘popular’ Brexit segment…. Theresa May has agreed with E.U leaders to reopen talks immediately to resolve the Brexit impasse, as she attempts to put together a revised exit deal to present to parliament in early March. She held ‘robust but constructive’ talks with the European Commission President in which they agreed to restart negotiations at an official level and meet before the end of February to review progress. The E.U would apparently welcome the UK into a custom-union, as supported by Jeremy Corbyn, however Theresa May fears going down that route as it would split apart her Conservative party. Donald Tusk has become the villain of the Brexit pantomime with his comments that there was ‘a special place in hell’ for Eurosceptics who did not have a clear plan for leaving the E.U….. The drama continues!

Anticipation, and perhaps hopeful expectation, of a trade deal between the US and China were dealt a blow with President Trump ruling out a meeting with Xi Jinping, the Chinese President before the 1 March trade deadline. This suggests that trade tariff escalations are likely and as such global equities fell on the news. Meanwhile, President Trumps State of the Union Address was littered with the usual bravado and exaggeration, but lacked substance.

 Markets in a minute

  • The FTSE 100 is up 1.04% this week.
  • The 10 year Gilt yield has fallen to 1.18%.
  • Ocado experienced a fire at a key warehouse, with sales growth likely to be affected, igniting a sharp fall in the shares.
  • A healthy trading update from Smith & Nephew led to shares rising c.4%.
  • Compass shares headed north, with shares up c.4%, following an upgrade to its growth forecasts.
  • Petrofac shares were off c.28% as their former head of sales pleaded guilty to eleven counts of bribery in Iraq and Saudi Arabia.
  • Unilever has acquired Graze, the healthy snacking brand for a reported £150m.

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