Sean Burgess | PraxisIFM Asset Manager and Co-Founder Emirates HR
US EQUITIES RISE FOR THE WEEK
With large caps outperforming the broader market, as Treasury Secretary Steven Mnuchin led a new round of trade negotiations in an effort to avoid the latest tranche of tariffs on $200bn of Chinese goods. Year-to-date the technology focused Nasdaq Composite remains the top index, up 16.03 percent
compared to 5.81 percent and 8.65 percent of the Dow Jones and S&P 500, respectively.
THE ECB KEPT INTEREST RATES UNCHANGED
Holding the refinancing rate at zero percent, whilst setting out its monetary policy for the remainder of 2018. The central bank plans to reduce its bond purchases from €30bn to €15bn next month and to stop them completely in December. ECB President Mario Draghi committed to keeping interest
rates low until at least summer 2019 as he targets inflation at or just below 2 percent.
POUND HITS 7-WEEK HIGH AGAINST THE US DOLLAR
With the rate reaching $1.313 on Friday, on the back of disappointing US inflation data and short-term economic uncertainty. Pound sustaining its strength will depend almost entirely on the progress made on a Brexit deal. The Bank of England governor Mark Carney has warned that a no-deal Brexit
could lead to another financial crisis in the UK and could see house prices fall 35 percent.
JAPANESE STOCKS HIT 7-MONTH HIGH
With the Nikkei 225 breaching the psychological 23,000 level for the first time since May, on the back of a weaker yen boosting exporters and receding worries on global trade. In other news, annualised economic growth in the second quarter was revised up to 3 percent from a previous estimate of 1.9 percent, as GDP was boosted by upward revisions in private consumption and business spending.
US OIL RISES ABOVE $70 A BARREL
Before slipping to close the week at $68.98, as investors factor in the impact on global supply of US sanctions on Iran and the energy market from Hurricane Florence. Prices could have been higher if it was not for the continued USChinese trade war that threatens oil demand. Brent crude, the international benchmark, rose 1.6 percent over the week to reach $78.09 a barrel, the highest close since May.
In other financial news:
- Russia raises interest rates to 7.50 percent, the first increase since 2014, as the central bank defends the ruble against inflation, US sanctions and market volatility
- Turkey hikes interest rates to 24 percent, a 6.25 percent increase, to support the country’s lira which has lost over a third of its value against the US dollar this year.
- Mark Carney to stay until January 2020, a seven-month extension, with the Bank of England Governor demonstrating commitment to ensuring stability post-Brexit
- $2bn charity fund created by Jeff Bezos, the richest person in the world, with the Amazon founder using the funds for the homeless and schools in poor communities.