- Trade talks between the US and China will continue but the significant progress has been made
- US President Trump asked China to remove tariffs on US agricultural products
- Reports on progress on US-China trade talks can’t overshadow the fears about the global economic downturn
- The positive news is that analysts emphasized that the probability of a global recession is low
- The Labour Party is not willing to support May’s deal and optimism about Brexit fades on politicians comments
Concerns about a global economic downturn, Brexit and trade talks between the US and China are still the main market mover. Trade talks between the US and China are one of the main events for the investors currently because risk aversion took over the financial again. Every bad news that is connected with “trade talks” will likely result negative for all major economies. Trade talks between the US and China will continue but the policymakers from both countries agreed that significant progress has been made. White House economic advisor Larry Kudlow said that the U.S. was heading to a remarkable, historic trade deal with China explaining that they made ‘fantastic progress’. US President Trump asked China to remove tariffs on US agricultural products, as trade talks are “moving along nicely.” According to the latest news, the deal is just a matter of time and 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. Despite this, reports on progress on US-China trade talks can’t overshadow the fears about the global economic downturn. 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 ECB downgraded its 2019 growth forecasts and the risk surrounding the euro area growth outlook have moved to the downside. The probability of a recession in the EU is still low but developments in the union are far from encouraging. The ECB´s President Mario Draghi also warned that the uncertainty around China is a threat to economic growth. The Chinese economy is heading for a rough start to 2019 and the economy is continuing to slow further. It is important to say that China lowered its target economic growth forecast for this year, to a range of 6-6.5%.
In the meantime, optimism about Brexit fades on politicians comments, as the Labour Party is not willing to support May’s deal. The Brexit uncertainty still affects negatively on the market and the market still has its doubts about the final outcome of Brexit. It is also important to mention that the US and North Korea were unable to reach an agreement on denuclearization last week and this had negative on the financial markets all over the world. US President Trump said that the summit ended with no agreement because Kim Jong-un asked for all sanctions to be lifted in exchange for closing a main nuclear facility. The US economy is still doing good in terms of growth but some Fed members warned that economic growth in the US could also slow this year.