Economic & Strategy Viewpoint
Caspar Rock: Monday markets - the week ahead 18 March 19
US and European equities both rose 3 – 4% last week. European banks performed particularly strongly following reports that Deutsche Bank and Commerzbank are close to announcing a merger. The move would signal that the long-needed consolidation of Europe’s banking sector may finally be starting to happen.
US-China trade talks resume
Markets expect Donald Trump and Xi Jinping to announce a trade deal at the end of this month. However, there are now suggestions this will be delayed until April, with the US and China reportedly struggling to agree on enforcement of Intellectual Property disputes. Equity markets would likely be unsettled by signs of a breakdown in talks.
Brexit deadline approaching
The UK government will look to hold another “meaningful vote” on its proposed Brexit deal this week or next. There is an EU leaders meeting at the end of the week. Theresa May may use this meeting to ask for a delay to Brexit if she does not believe she can secure parliamentary approval for her deal.
The week ahead
In the UK, employment and inflation data for February are released on Tuesday and Wednesday. In the US, there is a meeting of the Federal Reserve on Wednesday. Investors will focus on members’ interest rate expectations and any comments on balance sheet normalization. At the end of the week, the release of flash PMIs will provide an early indication of global economic activity in February. We expect to see stabilisation of data after a weak January. Eurozone data will be closely watched.