Weekly market review and outlook: markets brace for no-deal Brexit

European manufacturing data among the signs of a global slowdown.

Article updated: 23 August 2019 12:00pm Author: Helal Miah

Review

Over the past week markets seem to have settled down a little after the previous week’s heightened movements although the key macro-economic concerns have not gone away. The difference between the two year and 10 year US treasury yields dipped in and out of being inverted while the minutes of the Federal Reserve’s last meeting showed that all policy members voted for a cut, although only two voted for 50 basis points. Markets are pricing in another 25 basis points cut at the September meeting but the 100 basis points cut that the market priced in before the end of the year has been tempered a little by slightly hawkish comments from a couple of policy makers during the week.

While the US still supplies mixed economic data, other parts of the world continue to show signs of a slowdown, the latest European Manufacturing data was once again particularly weak.
Markets remain wary of the Hong Kong situation while there were mixed takeaways from Boris Johnson’s trip to Europe to meet Merkel and Macron. Sterling saw a modest bounce following comments from Europe’s leading leaders but markets are getting used to the idea that a no-deal is looking increasingly likely.

Attention towards the end of the week switched to the G8 summit in France with the US and UK leaders starting to look like outcasts. The grown-ups in the room will look to steer the US president away from having another strop and escalating the trade war with China while reminding the UK leader of potential impact of the most damaging form of Brexit.

The week ahead

The trading week in the UK will be shortened by the August bank holiday, we will therefore have a day longer to digest the events of the G8 summit. So in a week where trading volumes are likely to be thin we thankfully have little economic releases of major significance. Lookout for the revised US GDP numbers for the second quarter, expected to remain at 2.1% while the Eurozone inflation and unemployment figures may give the market something to trade around.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment. 

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