LAST WEEK – KEY TAKEAWAYS

Brexit: Possible breakthrough on Irish border

• UK shares rallied and sterling strengthened against the US dollar as the prospects of a last-minute Brexit deal improved;
• The Prime Minister and his Irish counterpart said they could see ‘a pathway to a deal’ after meeting on Thursday, and the EU agreed to hold intensive talks with the UK over the weekend;
• Meanwhile, the UK economy grew by 0.3% in the three months to August, up from 0.1% in the three months to July1.

• Omnis view: The chances of the two sides agreeing a deal seem to have improved following the UK’s concessions over the contentious issue of the Irish border. However, it remains to be seen if Parliament will back whatever deal Boris reaches with the EU.

Trade: Latest US- China talks lead to limited deal

• Global shares rallied after US President Donald Trump and Chinese vice-premier Liu He agreed a limited trade deal;
• The US put a hold on tariffs- taxes on companies importing products from abroad- on US$250 billion of Chinese goods due to come into effect next week, and China promised to increase purchases of US agricultural products.

• Omnis view: While the markets welcomed some respite from trade tensions, this deal falls short of what President Trump pledged on the campaign trail, so there may be more uncertainty ahead.

Europe: Mixed week for German industrial data

• Economic data showing slowing activity in Germany’s industrial sector in August and September weighed on the country’s shares, but they moved higher after industrial production unexpectedly rose in August.

• Omnis view: The export-heavy German economy is considered the engine of the EU so a slowdown is bad news for the region as a whole.

Emerging markets: Turkish forces enter Northern Syria

• The Turkish lira fell against the US dollar after Turkey’s armed forces launched an operation in Northern Syria to establish what the country’s president called a ‘safe zone’.

• Omnis view: Turkey’s actions, which have been widely criticised, are contained at present and should not affect other emerging markets.

LOOKING AHEAD - TALKING POINTS

Economic data (NB all regions)

• Tuesday- UK unemployment rate in August;
• Wednesday- UK inflation rate in September; EU inflation rate in September;
• Friday- Japanese inflation rate in September, Chinese economic growth in the third quarter of 2019.

1 https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/august2019