Monday, January 20, 2020 / 10:00 AM / United Capital / Header Image
In the previous week, the broad performance of stock markets of major developed and emerging economies was positive, except for China. This was as the prolonged trade spat between the U.S. and China saw massive progress, following the signing of the Phase One trade agreement. According to the deal, China will purchase US products in excess of $200.0bn across the agricultural, manufacturing, and energy products, as well as the services sector. On intellectual property, China will implement laws to guide against intellectual property theft. On the other hand, the U.S. will slash the current 15.0% tariffs on about $120.0bn worth of China's products to 7.5%.
Despite the optimism around the trade deal, investor sentiment in the Chinese market was dampened by slower GDP growth for the FY-2019 period. China's GDP growth came in at 6.1% y/y, its slowest in 29years. Elsewhere, in terms of monetary policy, global central banks continued their accommodative stance, as South Africa and Turkey cut policy rates by 25bps and 75bps respectively.
Furthermore, crude oil prices rose 62bps w/w to $65.0/b, supported by optimism around the US-China trade deal. This week, the commencement of the Trump impeachment trial at the U.S. Senate, ECB and People's Bank of China's MPC meetings are the key events to watch. Also, the ongoing E.U/U. K post-BREXIT relationships talk will be watched, as the 31st Jan 2020 deadline moves closer.