Market Update

Global equity markets took a pause this week, with most ending the week nearly unchanged after recent gains.
On Monday (January 21, 2019), China's Q4 GDP growth slowed to an annualized rate of 6.4%, down from 6.5% in Q3, bringing the full-year growth for 2018 to 6.6%. Despite media buzz about a "China slowdown," the data wasn't alarming. It's unrealistic to expect China to maintain such rapid growth indefinitely, and a gradual slowdown should be perceived as the new normal.
The annual World Economic Forum in Davos lacked substantial interest this year due to the absence of key leaders like Donald Trump, Theresa May, and Emmanuel Macron, who were preoccupied with domestic issues.
In the US, on Friday evening (January 25, 2019), Donald Trump agreed to a deal ending the 35-day government shutdown, albeit temporarily, funding the government for the next three weeks. In the UK, the pound strengthened amidst speculations of a delayed Brexit. However, this was unfavorable for the FTSE-100, causing a 2.28% decline, as it lowered returns for exporters and overseas earnings.
While extending Article 50 could prevent a chaotic no-deal Brexit on March 29, it doesn't resolve the deadlock in Parliament or with the EU. Furthermore, postponing the departure date might prolong the existing uncertainty, impacting business investment and consumer confidence negatively.
In the Eurozone, the European Central Bank (ECB) left interest rates unchanged on Thursday (January 24, 2019). ECB President Mario Draghi acknowledged downward risks but stated that the likelihood of a recession remains low due to accommodative monetary policy, robust employment, and low energy prices.
Next week, all eyes will be on the US. We anticipate insights into the Fed's evolving stance on US interest rates when Fed Chairman Jay Powell speaks following the monetary policy meeting. Additionally, Chinese Vice Premier is set to visit Washington for trade talks. Other significant events include the release of US PCE (the Fed's preferred inflation measure) and US employment data, including non-farm payrolls, unemployment rate, participation rate, and average earnings. Moreover, Eurozone Q4 GDP data will be released, and the UK Parliament will vote on Brexit Plan B.