In a longer than usual Budget speech, and in a slightly more jocular than usual mood, the Chancellor laid out the government’s vision for post-Brexit Britain. With a raft of measures aimed at shoring up businesses, infrastructure and the health service, Mr Hammond used the better than expected public finances to present an upbeat programme. Leaving some of the major announcements for last, this was a Budget to mark the coming of the end of austerity.

Some of the main announcements were:

• The personal allowance will be raised to £12,500 fr...

LAST WEEK – KEY TAKEAWAYS

UK: MIXED WEEK FOR STERLING AS BREXIT UNCERTAINTY RESURFACES

• Sterling weakened at the start of the week following Brexit Minister Dominic Raab’s one-hour meeting with Michel Barnier, the EU’s chief negotiator; 
• Raab told Barnier that the UK could not agree to the withdrawal deal at the EU leader’s summit on Thursday, and the talks ended in stalemate; 
• Sterling rallied later in the week as data released by the Office for National Statistics showed wages grew at the fastest pace since the financial crisis in t...

LAST WEEK – KEY TAKEAWAYS

MARKETS: EQUITIES RATTLED BY TIGHTENING MONETARY CONDITIONS

• US equities fell to their lowest level in eight months on Wednesday, and Asian and European equities followed them down on Thursday; 
• One of the main catalysts for the sell-off was concerns that rising interest rates could slow economic growth, with the tech sector among the hardest hit; 
• US equities staged a tentative rally on Friday, as the tech sector rebounded, although financials lagged despite strong third-quarter earnings from several investm...

Yesterday’s sell-off in US equities, which has spread to Europe and Asia today, is by and large a reaction to recent developments in the US economy. Stimulative policies from the Trump administration, such as tax cuts, have spurred the pace of economic growth to multi-year highs. In response, the Federal Reserve (the Fed) has raised interest rates and signalled its intention to continue doing so throughout 2019. Until last week, markets were sceptical of the Fed’s forecasts. However, strong economic data have since caused a reassessment of t...

LAST WEEK – KEY TAKEAWAYS

UNITED STATES: FED FORECASTS UPWARD TRAJECTORY FOR INTEREST RATES

• US equities rallied, but the US dollar stayed flat, as the Federal Reserve raised interest rates to a target range of 2% to 2.25%;

• The latest hike was the eighth in the current cycle, and the third in 2018, and the Fed hinted that it would increase rates once more this year and three times in 2019;  

• Fed Chair Jay Powell hailed the strength of the American economy and acknowledged concerns about trade tariffs, but he argued they did ...

LAST WEEK – KEY TAKEAWAYS

Global trade: No sign of a break in trade tensions ahead of midterms  

• US President Donald Trump followed through on his pledge to impose trade tariffs on another $200 billion worth of Chinese goods, starting at 10% and rising to 25% in 2019 if the two sides do not come to an agreement in the meantime;  
• China retaliated with its own round of tariffs of between 5% and 10% on $60 billion of American products and accused the US of a lack of ‘good faith’ in trade negotiations; 
• Tech stocks weighed on the US marke...

LAST WEEK – KEY TAKEAWAYS

UK POLITICS: ENCOURAGING REMARKS FROM THE EU BOLSTER PRIME MINISTER

• Sterling strengthened on Monday as the EU’s chief Negotiator Michel Barnier claimed a Brexit deal could be agreed by November;
• In a further boost for Prime Minister Theresa May, outgoing European Commission President Jean-Claude Juncker hailed her Chequers proposal as a starting point for a post-Brexit free trade area;
• Eurosceptic Conservative MPs met on Tuesday to discuss replacing the Prime Minister, although leading Brexiteers including Dav...

LAST WEEK – KEY TAKEAWAYS

BREXIT NEGOTIATIONS TO INTENSIFY OVER COMING MONTHS

• The EU’s chief negotiator Michel Barnier met with UK Brexit Minister Dominic Raab, pledging to ‘negotiate continuously’ as the two sides try to come to an agreement over the next few months;

• The British government published 20 technical notes covering the potential consequences of a ‘no deal’ Brexit. Raab played down the prospect, while Foreign Secretary Jeremy Hunt appealed to the EU to take a constructive approach to negotiations;

• EU financial s...

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