Home Global News The political headlines are still the main market mover

The political headlines are still the main market mover

  • Trade talks between the US and China will continue but the progress has been made
  • This is positive news because trade war would likely downgrade earnings of a lot of companies all over the world
  • Talks between Juncker and Theresa May have been “constructive” but the withdrawal deal is not open for renegotiations
  • The UK Parliament is scheduled to vote next week and a Brexit deal will probably not be reached soon

Trade talks between the US and China will continue but the policymakers from both countries agreed that progress has been made. According to the latest news, the deal is just a matter of time and this positive news returns optimism on the financial markets. This is also positive for all other major economies because the trade war would likely downgrade earnings of a lot of companies all over the world. The ECB´s President Mario Draghi also warned that the uncertainty around China is a threat to economic growth. The US economy remains strong but the main reason why the case for raising rates has “weakened” is the trade war, Brexit and slowing growth in Europe and China. The economic growth in the EU is decelerating, the inflation is still below expectations and this situation confirms speculation that the ECB won’t hike rates until 2020. The probability of a recession in the EU is still low but developments in the union are far from encouraging.

On the other side, fears of a hard-Brexit came back and a Brexit deal will probably not be reached soon. The UK Parliament is scheduled to vote next week and the UK Prime Minister Theresa May will have to secure the changes she wants on the Irish backstop. The EU Chief Negotiator Juncker and the UK Prime Minister had a meeting this week to try to avoid a no-deal Brexit. The EU Chief Negotiator Juncker repeated once again that the withdrawal deal is not open for renegotiations but the EU could make further offers to the UK. Talks between Juncker and Theresa May have been “constructive” and both sides will continue to explore options in a positive spirit. Some rumors also say that Theresa May should stand down after the local elections in May and let the next phase of Brexit negotiations be handled by a new Prime Minister.

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