Market Update

As anticipated three weeks ago (please refer to our previous discussion), President Donald Trump announced this week that he would postpone the implementation of planned US tariff increases, which were scheduled for today, Friday, March 1, 2019. This decision came as the United States and China continued to make progress in their negotiations for a new trade agreement.
Consequently, global equity markets experienced a surge, particularly in Chinese equities, signaling a reduction in uncertainty surrounding global economic growth. Given that the US and China are the world's two largest economies, this progress was welcomed. As we've mentioned before, with Presidential elections looming next year, the White House has a clear incentive to reach a swift compromise.
In the currency markets, the pound showed significant movement due to the potential delay in Brexit proceedings. While a Brexit delay is generally seen as supportive for the pound, offering relief from the threat of a no-deal Brexit, it appears to be more of a hopeful expectation than a concrete solution. The uncertainty and theatricality surrounding the UK economy persist, as the exact outcomes of the delay remain unknown. It's possible that the decision day might simply be postponed from the end of March to the end of June.
It's essential to note that what benefits the pound can have adverse effects on the FTSE-100. A stronger pound lowers returns for exporters and diminishes the value of overseas earnings. This dynamic was evident in the market performance, with the FTSE-100 ending the week 1% lower.
Interestingly, if Prime Minister Theresa May fails to secure approval for her Brexit deal with the EU by Tuesday, March 12, 2019, she plans to present the idea of a no-deal Brexit to Parliament the following day, Wednesday, March 13, 2019. Coincidentally, this day was also scheduled for the Chancellor of the Exchequer, Philip Hammond's, Spring Statement. Despite the potential political developments, since the Spring Statement is not a comprehensive fiscal statement and is expected to be relatively brief, it might proceed as planned. Moving it at this point could signal the government's anticipation of Theresa May's defeat in the vote on Tuesday.