As the world continues to keep a very close look on the spread of the coronavirus, the world economy seems to be bouncing back on the hopes that the conference call scheduled for later today, at 1200 GMT, by the financial ministers of the G7 countries will conclude with an agreed action plan to ease the impact the virus has caused on the economy so far.
So far today the markets have echoed these hopes.
The impact of the Istanbul mayor elections at the end of March, when President Recep Tayyip Erdogan’s party lost to the CHP party, are now beginning to show as Erdogan and his party refuse to accept defeat. This lack of acceptance, according to Bloomberg, has put a dent in consumer and business confidence.
The results of this political uncertainty have been seen in the growth of the Turkish economy, which has been seen to be at a slower pace in the second quarter. “Gross domestic product (GDP) expanded a seasonally adjusted 1.
The Konjunkturforschungsstelle Swiss Institute for Business Cycle Research released the KOF Leading Indicator for August this morning. The indicator -or barometer as it is often referred to - which captures the movement of GDP growth and the economic trend in Switzerland, showed the same reading as July.
The indicator showed a level of 97.0 for July and August but, according to the official report, it is believed that during the next few months the Swiss economy can be expected to perform moderately.
After the Queen
approved the Prime Minister’s plan to suspend parliament yesterday, legal
battles over this plan have begun to stack up, “with the first case filed by
Brexit opponents to be heard in an Edinburgh courtroom,” Bloomberg said.
More than one million
people signed a UK petition against this suspension and protestors took to the
streets all over the UK last night, chanting “stop the coup” and carrying
As investors keep a keen eye out on trade war developments between the U.S and China, stocks, oil prices, and currency are just three markets that are being affected.
Asia stocks traded higher today, with “Shanghai composite adding 1.68 percent and the Shenzhen component gaining 2.25 percent. The Shenzhen composite advanced 2.118 percent, while Hong Kong’s Hang Seng index fell marginally,” according to CNBC.
While stocks were on the rise today, the picture for oil was very different yesterday, as oil prices edged downward.
The trade war between the U.S and China heated up over the weekend, with China announcing it would apply new tariffs on imported goods from the U.S and President Donald Trump responding by raising rates on nearly all Chinese imports.
Before the U.S stock markets opened on Friday “China’s Ministry of Finance announced on its website that it will apply new tariffs of between five percent and ten percent on $75 billion worth of goods from the United States,” according to CNBC. There were more announcements with the ministry going further to say that a 25 percent tariff on U.
Sterling jumped more than half a cent, to nearly a one-month high, according to
Reuters. This jump came after French President Emmanuel Macron said that the Brexit
deal can be amended during a visit with U.K. Prime Minister
The amendment to the deal has to do with the
backstop. This is the first time an EU leader has suggested that the withdrawal
agreement can be reopened.
The Federal Reserve (Fed) released the minutes of the meeting it had three weeks ago yesterday, during which it was decided that interest rates would be cut. The main three reasons for the cut, as stated in the minutes, were the slowdown in growth – particularly in business, investment and manufacturing, which is likely linked to the ongoing trade war – risk management and that uncertainly remains elevated, and the three reasons were sited as inflation, which is still running below the Fed’s two percent goal.
After economists at Barclays PLC looked over their outlook for central bank rates and growth across major economies, their latest forecast is that the Federal Reserve (Fed) may go ahead with three further quarter-point cuts this year.
According to Bloomberg, this revision was made due to the heightened forecast that will be a “non-negotiated exit by Britain from the European Union, resulting in a mild recession in that country next year and two interest-rate cuts by the Bank of England, one this year and one in 2020.”
The economists also revised their euro-zone growth and reduced it to 0.
U.K. Prime Minister Boris Johnson announced to the European Union that he is keen to look into different ways to “prevent a hard border on the island of Ireland”, according to Bloomberg.
In this first public attempt to renegotiation a Brexit deal, Johnson sent a letter to the European Council President Donald Tusk, stating that he wants to replace the backstop provision - which is one issue that Johnson said he will not consider in the negotiations in his pre-election debate – with a “legally binding commitment.