Market Update

Heading into this week's US/China trade talks, the atmosphere was pessimistic due to the US blacklisting eight Chinese technology firms and China halting NBA broadcasts. However, global equities saw an uptick during the week as signs of progress emerged. President Donald Trump's announcement of an agreement outline led to the suspension of planned tariff increases, thanks to China making some concessions in agriculture.
While this partial deal brought a momentary positive note, critical issues like intellectual property theft, forced technology transfers, and Chinese industrial subsidies remained unaddressed.
The release of minutes from the Fed's September monetary policy meeting on October 9, 2019, revealed concerns about increased downside risks due to the trade tensions with China. Some policymakers opposed further interest rate cuts and advocated for defining the limits of policy easing. Despite this, the unchanged US CPI inflation at 1.7% on October 10, 2019, may encourage further monetary easing, supporting our belief that the Fed will cut interest rates in their upcoming meeting.
In the UK, the pound gained strength following news of a potential Brexit deal pathway after a meeting between Boris Johnson and his Irish counterpart, Leo Varadkar, on October 10, 2019. However, the details of their discussions and the subsequent joint statement indicated limited progress.
The possibility of a last-minute Brexit deal remains, but the more likely scenario seems to be a Brexit delay followed by a general election, essentially serving as a second Brexit referendum. Unfortunately, this ongoing uncertainty persists, whether through an extension prolonging economic ambiguity or an election failing to resolve the political deadlock.
Looking ahead, this week features the Queen's Speech and an EU Summit. Additionally, in the UK, key data including employment figures (unemployment rate and weekly earnings), CPI, and retail sales will be released. Other notable events include US retail sales, the Fed's Beige Book, Eurozone CPI, and Chinese GDP figures.