LAST WEEK – KEY TAKEAWAYS

UK: Political manoeuvring boosts sterling

• Sterling recovered from its lowest level against the US dollar in two years as MPs backed an amendment
which would make it harder for the next Prime Minister to suspend parliament ahead of the Article 50
deadline on 31st October;
• The amendment to a bill unrelated to Brexit requires ministers to update the House of Commons in October
on progress to restore the power-sharing executive in Northern Ireland.

• Omnis view: There were signs that the EU might be softening its stance on the contentious Irish border issue after the EU’s chief negotiator Michel Barnier claimed to be open to alternative solutions, although neither side seems to be able to come up with a concrete proposal.

Corporate Earnings: Stong Start to earnings season by US Banks

• US banks Citigroup, Goldman Sachs, Bank of America and JP Morgan all beat earnings forecasts in the
second quarter of the year;
• However, shares fell in Netflix, the first of the FAANG group of tech stocks to report, after the company
missed expectations for new subscribers and lost customers in the US.

• Omnis view: US banks typically set the tone for earnings season so last week’s results would usually be considered encouraging, although the outlook remains subdued.

Asia: Trade tariffs weigh on Chinese economy

• Economic growth in China slowed in the second quarter as trade tariffs imposed by the US on the country’s
goods appeared to take effect.

• Omnis view: The Chinese economy is growing at a robust rate nonetheless, and markets should welcome the prospect of further stimulus measures by Beijing.

LOOKING AHEAD - TALKING POINTS

Conservative leadership contest

• Theresa May’s successor as leader of the Tory party and Prime Minister is announced on Tuesday.

Monetary policy

• Thursday- European Central Bank interest rate decision.

Economic data

• Friday- initial estimate of US economic growth in the second quarter.

Corporate earnings

• Facebook, Amazon and Google’s parent Alphabet are the next of the FAANG stocks to report earnings, along with industry bellwether Caterpillar.