After a terrible start to the week, the S&P 500 closed down just -0.76%. US “trade tensions” with the EU and “trade war” with China continued to escalate at the beginning of last week. But following a big dip on Monday, President Trump signalled a postponement of tariffs on European autos helping allay fears, at least in relation to US and European markets. The brinkmanship with China, however, continues with the blacklisting of Huawei in a tat-for-tit against China’s retaliatory 25% tariffs on a further $60 billion of imports after trade talks fell through the week before last. For China, these further interferences come just as data begins to more fully reveal the impact of the existing headwinds; data on Chinese PMI, Industrial Production, Retail Sales and Exports all fell short of forecasts. US 10-year Treasury yields fell 8 basis points on the week bringing them back below 2.4%.
Meanwhile, Brent crude oil prices rose around $2 to $72.2, partly on the back of tanker and pipeline attacks in the Middle East, with the US and Saudi Arabia accusing Iran, adding to the ongoing tensions. Additionally, Saudi and other OPEC producers publicised their intention to keep supplies of oil constrained for the remainder of 2019. Across the waters in Australia, the Conservative (centre-right coalition) party look set to secure a surprise majority government (in the lower house only); this is notably in stark contrast to the Conservatives in the UK who are polling in fifth place by some measures with the newly formed Brexit Party riding the wave of Brexit frustration to lead the polls with the European Parliament Elections this Thursday.
The week ahead opens with Japanese GDP and Industrial Production figures followed by Germany’s Producer Price Index Germany and the Chicago Fed National Activity Index. On Tuesday, focus will be on the RBA meeting minutes and Eurozone Consumer Confidence. FOMC minutes are out on Wednesday along with UK inflation data and Japan Trade Balance and Machine Orders. Business Confidence data from Germany and France is released on Thursday along with Flash PMIs across the Eurozone and the start of European Parliament Elections. On Friday is CPI data out of Japan, UK Retail Sales and US Durable Goods.