This week saw modest gains on most American indexes, with the s&p increasing by 0.39% and Nasdaq by 0.9%. The Dow remained fairly stable with a loss of -0.02%. Overall the markets seem to be pricing in a relaxed scenario for tariffs as the deadline for trade talks between the Us and China appears to have been delayed beyond Marche the 1st. Thursday saw the release of Gdp growth data for the 4th quarter of 2018, coming at 2.6%, above expectations of 2.3%, but below the target of 3% set by the government. Growth is expected to slow down to 2.2 % for the first quarter as the effect of the tax cuts fades.
The core PCE rate was also released for the month of January coming more or less in line with expectations at 0.2 %. The dollar index remained fairly stable increasing by 0.06% for the week.
Michael Cohen, the former personal lawyer of Trump, testified on congress against Donald Trump, accusing him of repeatedly lying and misbehaving in relation to his campaign for presidency. Of particular interest is the fact that new investigations could start on the figure of Allen Weisselberg, the CFO of the Trump Organization, who may also be called to testify on congress, perhaps revealing details about the potential Russian business ties that the president may have had or have.
REST OF THE WORLD
In China the Shanghai composite soared by 6.76% as global index provider MSCI will quadruple the weight of Chinese stocks within its indexes and positive developments on trade, mainly the delay in the deadline for trade talks between the US and China, painted a better picture for the country.
The Nikkei index in japan increased by 0.83%, even as industrial manufacturing data was negative, with a -3.7% growth YoY in January.
The Sensex index in India rose by 0.54%. A potential political crisis appears to have been brewing in India as India-Pakistan relations deteriorated after an Indian pilot was captured after an air raid in the region of Kashmir, were a proxy war is occurring between the two countries. Tensions were lowered when Pakistan sent back to India the captured pilot.
Wti Oil price decreased by approximately 2.50% over the week, despite Opec production falling to a 4-years low. In addition to this, it has been reported that a massive deposit of shale oil was discovered s in Xinhua, in the north west of China. Chinese authorities are in fact allegedly planning to tap more into the oil reserves of the country.
Finally, in a meeting between Vice President Pence and self-declared ad interim president of Venezuela Juan Guaido, more sanctions have been promised to be lifted against Venezuela, which is currently experiencing political turmoil.
Data showed manufacturing activity under pressure throughout the Eurozone. The overall manufacturing purchasing managers’ index (PMI) for February fell for the seventh-consecutive month and, for the first time since June 2013, fell below the 50 level to 49.3.
The Eurozone Consumer Price Index (CPI) estimate for February came in at a 1.5% Y/Y gain, after rising 1.4% in January, while the core CPI was up 1.0% Y/Y. The EUR-USD changed little from 1.1358 TO 1.1365, while bond yields in the region were mostly higher. German 10Y Bund yields 0.18%, while Italian 10Y BTP yields at 2.73%. French 10Y bond is currently yielding 0.58%, and Spanish 10Y stands at 1.19%
Stock markets were calm across Europe. German DAX 30 started off the week at 11,505.39 and ended it at 11,601.68, resultin in gain of 0.84%. French CAC 40 initiated the week at 5,231.85, while ending it at 5,265.19, gaining 0.06%. Spanish IBEX 35 ended the week at 9,267.70, showing 0.69% weekly increase.
Italian FTSE MIB went from 20,436.96 to 20,694.53, recording 1.26% gain. EURO STOXX 50 gained almost one percent, finishing with the value of 3,312.10.
UK gilts sold off amid ongoing Brexit uncertainty, resulting in 1.29% 10Y gilt yield.
The two most likely outcomes to the UK’s plan to leave the European Union (EU) now appear to be either the approval of Prime Minister Theresa May’s deal or an extension of the March 29 departure deadline.
The British pound rose against the U.S. dollar from 1.3097 to 1.3202 on the reduced likelihood that Britain would leave the EU without a Brexit deal. The stronger pound pressured UK stocks since many UK companies earn significant revenues outside of the country. This was reflected in FTSE 100 that fell 1.07% to 7,106.73.
Adding to the uncertainty, for the first time since Britons voted in June 2016 to leave the EU, Labour party is backing a fresh referendum that would allow voters to change their mind ahead of the March 29 deadline. One day after Prime Minster Theresa May said that she hopes to bring a revised Brexit deal before parliament by March 12, Jeremy Corbyn, the leader of the UK’s opposition Labour Party, said that his party will back a new Brexit referendum alongside a British parliamentary election.