Market Update

In the final stretch of the UK election campaign, the focus shifted to key issues, notably the National Health Service (NHS), with Labour leader Jeremy Corbyn targeting it as a pivotal battleground. Early in the week, ahead of the NATO meeting in London, Corbyn sent a letter to US President Donald Trump, seeking revisions in the US negotiating objectives for a post-Brexit trade deal. This strategic move aimed to gain ground in the election, although the televised debate later in the week showed no clear winner, highlighting various topics such as leaked trade documents and the Irish border, along with issues like antisemitism within the Labour party.
On the global stage, the NATO meeting in London, meant to discuss defense, was dominated by talks on global trade and demands from the US for member countries to increase defense spending. While agreements on NATO funding splits were loose, Trump's ambiguity on Chinese trade negotiations and the upcoming tariffs on Chinese goods left markets puzzled. Trump's reluctance to disrupt the US domestic economy before the next presidential election indicated a potential softening in his trade stance, despite past inconsistencies and unpredictability in his approach.
Meanwhile, Christine Lagarde, head of the European Central Bank (ECB), testified at the European Parliament, emphasizing the need to reassess the ECB's monetary stimulus and hinting at the importance of fiscal stimulus to drive inflation to target levels. Japanese President Shinzo Abe announced a significant 25 trillion Yen stimulus package, addressing disaster recovery, economic risks, and post-Olympics economic vitality. This move marked a shift from Japan's traditional reliance on monetary policy.
In terms of data, China's PMI data exceeded expectations, indicating a healthier manufacturing sector. UK PMI data outperformed predictions, and European GDP met expectations. The US jobs data on Friday revealed a decrease in headline unemployment, although the participation rate also declined, suggesting some noise in the data. However, there was a stronger-than-expected increase in US payrolls across various sectors.