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AUTHOR: Jason J. Roque, CFP®, APMA®
TITLE: Investment Adviser Rep – CCO TAGS: TRADE, STOCKS, BREXIT, HONG KONG |
There were a myriad if impactors that contributed to an up market last week. Was it fool’s gold or legitimate support?
Trade
The week saw talks between China and the US resume, kind of. They announced face to face meetings would resume in October. Markets cheered the news as risk on assents, materials, and financials all rallied on the announcement. It must be remembered that additional tariffs were levied on September 1st and will continue to be levied in October and December. Any optimism in this headline should be taken with a grain of salt.
Economic Data
Economic data was mixed last week as manufacturing slipped into contractionary territory. On the other side Services were still in expansionary territory. The manufacturing sector is roughly 1/5th the size of the services sector, but the statistic is still meaningful.
Brexit
Last week the crash course to a no deal Brexit took a hard turn. The house of commons took power away from Boris Johnson, Prime Minister, who was seemingly seeking to force a no deal Brexit. This requires the Prime Minister to go to Brussels and request an extension to the Brexit deal. While this is the latest, there is no guarantee that Boris Johnson will not have an answer to this latest action.
Hong Kong
Tensions in Hong Kong calmed last week, as China elected
to withdraw the controversial extradition law that caused protests and riots over the last month. Calming tensions in Hong Kong can hopefully restore order and re-engage a major trade port that is already heading for a recession.
Conclusion
Three of the four topics covered are geo-political. While the headline news associated with them warranted the climb seen last week, next week could see the reverse occur. The economic data released was the concern that caused a market slump this last Monday. One month’s data, however, does not make a trend. A manufacturing recession looks likely at the global level, but additional data is still needed to confirm.
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