Market Update

Positive developments in the US-China trade talks propelled global equity markets to another positive week.
News reports on Thursday suggested that both the US and China had agreed to roll back trade tariffs as part of an initial deal, although specifics were lacking. Representatives from both sides confirmed progress and outlined tariff agreements and concessions as part of the preliminary arrangement. However, President Trump clarified on Friday that no formal agreement had been reached, and the negotiations were still in progress. With the looming impeachment hearings and the upcoming re-election bid, Trump might soften his stance towards China under pressure.
In the UK, the Bank of England (BoE) maintained interest rates at 0.75%, though the decision was not unanimous, with two members advocating for rate cuts. The announcement led to a drop in the pound's value, boosting the FTSE 100, given its offshore revenue benefits from a weaker pound.
It appears the Monetary Policy Committee is acknowledging reality, recognizing the need for accommodative monetary policy due to the global economic conditions, Brexit uncertainty, and UK consumers' sensitivity to interest rates. Despite recent hawkish statements by Mark Carney, the likelihood of rate cuts remains higher than rate hikes.
Additionally, the BoE revised its Brexit assumptions, moving away from an "average" scenario to assume an orderly transition to a "deep free trade agreement" over a shorter period. Consequently, the bank downgraded the UK's growth forecasts to 0.1% for 2020 and 0.5% for 2021. The change in Brexit assumptions raises concerns about potential political interference.
Looking ahead, key data releases include UK labor statistics, third-quarter GDP figures for the UK, Germany, and Japan, as well as inflation data for the UK, Germany, and the US. Spain's elections and the world's largest shopping event, "Singles' Day," are also scheduled for the upcoming week.