30 Jul 2019
“In the US, we are likely to see lower rates, which is going to restimulate the economy. More importantly, it’s going to create a positive for the mortgage market and we believe global equities can continue to do better. Obviously, geopolitical concerns can disrupt everything in the short-run, but the fundamentals point to higher equities and we think people are wrong in de-risking as much as they have.
“China grew at 6.2% - it’s slower, but we’re all envious of that growth. The trend in China continues to be downward. We’re hearing from CEOs more and more supply chains are moving out of China. People are not waiting to see what the outcome is. China needs to find ways to stimulate its domestic economy if they are going to continue to grow.”
Source: BlackRock Investor Pulse, May 2019.
UK inflation (June): Consumer prices in the UK rose 2% in June, in line with expectations and the Bank of England’s target. Rents and utility bills were the main driver of the increase, while clothing and footwear fell.1
UK retail sales (June): Home improvements and charity shop sales gave an unexpected boost to the UK retail sector in June. The volume of sales grew 1% in June compared to May, reversing a recent run of falling sales. Economists polled by Reuters had predicted a 0.3% contraction.2
Global growth: The International Monetary Fund cut its growth forecasts for the global economy for this year and next. It is now predicting growth of 3.2% in 2019, down from 3.3%, and 3.5% in 2020, down from 3.6%. It said there was an ‘urgent need’ to reduce tensions over trade.3
UK borrowing: Public sector net borrowing rose in June as debt interest payments spiked higher and the government spent more on services. It totalled £7.2bn, up from £3.3bn in June 2018, the highest June borrowing figure since 2015.4
China’s Nasdaq: Trading started in China's ‘Star’ market, its rival to the Nasdaq. 25 companies were listed at inception and shares surged on the first day of trading. The new tech board, which is operated by the Shanghai Stock Exchange.5
1 UK inflation stays at 2 per cent in June, The Independent, July 2019
2 UK retail sales for June rise unexpectedly giving sterling a boost, Financial Times, July 2019
3 Global growth forecast cut by IMF amid trade tensions, BBC, July 2019
4 Government borrowing in June highest since 2015, BBC, July 2019
5 Shares on China tech exchange surge in trading debut, Financial Times, July 2019
German manufacturing and services purchasing managers indices (PMI) (July, flash): German manufacturing has been caught in the crossfire of the China/US trade tensions. However, it is expected to see an improvement this month, rising to 45.2 from 45.6
US manufacturing and services PMI (July, flash): US manufacturing is expected to fall to 50.4 from 50.6 as the trade tensions with China are felt in the real economy. However, services are expected to rise to 52.4 from 51.0.6
ECB rate decision - The odds of a rate cut from the ECB are narrowing as Mario Draghi hints at further easing, responding to a slowing eurozone economy.7
US gross domestic product (GDP) (Q2, preliminary): US economic growth is expected to fall to 1.9% quarter on quarter from 3.1% previously.6
6 Week ahead, IG Index, July 2019
7 Market odds of ECB rate cut this month surpass 50%, Financial Times, July 2019
The opinions expressed are as of July 2019 and are subject to change at any time due to changes in market or economic conditions. The above descriptions are meant to be illustrative only.
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