Sean Burgess | PraxisIFM Asset Manager and Co-Founder Emirates HR
US STOCKS ROSE DURING A LIGHT TRADING WEEK
With the Nasdaq Composite Index crossing above 8,000 for the first time, as market sentiment was boosted after the US and Mexico announced a revised bilateral NAFTA deal. All the major indices are in positive territory year-to-date with the tech-focused Nasdaq and small-cap Russell 2000 outperforming their peers at 17.47 and 13.41 percent, respectively.
US THREATENS TO PULL OUT OF THE WTO
With Donald Trump claiming that the 1994 agreement to form the World Trade Organization “was the single worst trade deal ever made”. President Trump has heavily criticized the organization, created to oversee and promote open trade, for being biased against the US – official records show that the US
wins approximately 9 out of 10 cases where they are the complainant.
EUROPEAN EQUITY FUNDS HIT BY 25 WEEKS OF OUTFLOWS
Wiping out all of 2017’s inflows, as investor confidence has been damaged by poor economic growth, global trade fears and the popularity of far-right nationalist parties. Adding some support last week were comments by the EU’s chief Brexit negotiator that the EU is willing to agree an unprecedently close partnership with Britain that they won’t get with any third country.
INDIA’S ECONOMY EXPANDS BY 8.2 PERCENT
In the three months up to June, the fastest rate in two years and a significant increase on the 7.7 percent hit in the first quarter. Growth was driven by a strong manufacturing sector and robust consumer spending. Whilst the economy expands, the currency falls; the rupee lost 3.6 percent against the US dollar in August alone as the US threatens to impose more tariffs on trade partners.
OIL RECORDS SECOND CONSECUTIVE WEEK OF GAINS,
With WTI crude pushing above the $70 a barrel mark midweek, on the back of falling US crude supplies and fresh US sanctions on Iran. Sanctions will come into force in November, however traders are already pricing in lower exports and Iran has threatened to stop oil being transported through the Strait of Hormuz, the thoroughfare for 30 percent of seaborne oil.
In other financial news:
- Swedish Krona falls 11.7 percent this year, the worst performing developed market currency, due to negative interest rates and an uncertain general election.
- Turkish lira falls 10 percent over the week, and down 35 percent over August, after Moody’s Investors Service downgraded 20 of Turkey’s financial institutions.
- Argentina raises interest rate to 60 percent, up from 45 percent, in an effort to stabilise the peso that has fallen 50 percent this year against the US dollar.
- Coca-Cola to buy Costa coffee, in a deal worth £3.9bn, as owner Whitbread looks to realise a significant return after buying the coffee shop chain for £19m in 1995.