Market Analysis

                                         10th September- 16th September


Monday 10th September

 European shares edge up after gains by banks, trade exposed markets continue to be affected by trade war
European shares gained on Monday as banks gained. Although trade exposed markets feel the edge as President Trump amps the stakes on the trade war with China. As he announces he is ready to impose tariffs on nearly all of imports from China. The pan-European STOXX 600 index added 0.25 percent on Monday after ending on Friday just above its lowest close since early April. The FTSE rose by 1%. Trade exposed markets like the Auto market, fell by 0.3% and shares in Apple suppliers Dialog Semiconductor and AMS came under pressure after Trump said the iPhone maker should move production to the U.S. to avoid the tariffs. German lender Deutsche Bank and Commerzbank rose 0.1 and 2.2 percent respectively. After an announcement from Josef Ackermann, former CEO of German lender Deutsche Bank saying that Europe needed bank mergers to create a regional champion. And the rise was accredited with the rumours that these two banks are possible partners. Here in the UK, RPC Group soared 21.3 percent after Europe’s biggest plastics packager said it was in early talks with funds about a takeover offer for the company. This was the largest gain on the STOXX.

Global stock markets steadied by Europe
Global stock markets were steadied by gains in the European market, after the US/China trade war escalates and the Asian market is affected by further Fed rate hikes, giving Asia its longest losing streak since the end of 2015. European gains were split into a 2% jump in Italian shares on soothing budget comments, Swedish crown strengthened after the nationalist Sweden Democrats gained less ground than polls had predicted in elections on Sunday. However, in Asia shares outside Japan fell 0.9 percent to the lowest since July 2017. With Beijing saying there would be repercussions if Washington introduces any more trade measurements. Concerns are raised, as Beijing will not be able to match Washington dollar to dollar, leading to potential action of lowering the yuan or acting against U.S. companies in China.

Oil Price Up, as US drilling stalls and threat of Iran sanctions begins to take hold 
Oil prices rose on Monday as US drilling stalls and lower supply anticipated as the Iran sanctions come to take place in November. Brent Crude oil jumped up 1.4%. Oil prices are set to remain high with supply decreasing due to sanctions against Iran, capped U.S. shale output growth and instability in production in countries like Libya and Venezuela. Iran crude oil exports are declining ahead of the November deadline and although there have been importers that oppose these sanctions, few seem to be prepared to stand up to Washington. As well as Washington exerting pressure on countries to not import Iranian crude it is also urging other producers to keep supply high to keep oil prices down. Investors are worried about the impact on oil demand of the trade dispute between the United States and other large economies, as well as the weakness of emerging markets. 

Tuesday 11th September 

European shares stalls as U.S/China Trade war Heats Up
A recovery in shares stalled on Tuesday, as investors are worried about the growing scale of the trade war between China and the U.S. The STOXX 600 wavered at parity and at 08:25 GMT fell by 0.05%. But the Pan European Index was still up by nearly 1%, from the five-month low last week. Germanys DAX fell by 0.05%, while the UKs FTSE fell by 0.3% as the uncertainty of the Brexit deal continues to take its toll. 

China hopes to gain WTO's backing on U.S Sanctions over dumping duties
China is to ask the WTO for its backing next week for sanctions on the U.S, for Washington’s non-compliance with a ruling in a dispute over U.S. dumping duties. This is likely to lead to years of legal work on getting the sanctions and price of the sanctions. These issues first arose in 2013, where China complained about U.S. dumping duties on several industries including machinery and electronics, light industry, metals and minerals, with an annual export value of up to $8.4 billion. Dumping is an economic tactic where manufactures export a product to another market at a lower price than normal, in the hope of increasing market share in a foreign market by driving out other competitors and creating a monopoly over the market, where they can control price and quality of the product. The issue China had was the method in which the US calculated 'dumping' in the its method called 'zeroing'. This method tended to increase the level of U.S. anti-dumping duties on foreign producers and was repeatedly ruled to be illegal in a series of trade disputes brought to the WTO. These series of defeats have led to the campaign by Donald Trump, to reform the WTO or leave it, if it does not shape up.

Wednesday 12th September  

Sterling down as rumours about leadership challenge to May circulate
The Sterling fell today, after reports of a potential leadership challenge to Theresa May. The pound fell a quarter of a percent to as low as $1.2994 against the dollar after the BBC reported a group of about 50 lawmakers in May’s government had met to discuss how and when they could force her out of her job. After concerns about her decision to remain in a free trade zone for goods with the EU. The pound has jumped up and down after every Brexit related news, with investors trying to work out the type of deal being reached.

Trade War sends Chinese Stocks into disarray 
The trade war only began 6 months ago and has already sent the Chinese stocks stumbling into the same league as debilitated emerging markets such as Turkey, Argentina and Venezuela. China's stock has fallen 20% in 2018, joining the worst performing trio of the already mentioned countries. On the other hand, the American Nasdaq is one of the world’s biggest gainers, rising by 15.5%. China's currency has also fallen and share transaction volumes have shrunk.

Thursday 13th September 

Sterling holds steady to recent highs, amid BoE to keep rates on hold
Sterling held close to recent highs on Thursday, with little change when the BoE announced it intends to keep a rise in interest rates on hold. The pound traded at $1.3046, below a more than one-month high of $1.3087 hit earlier this week. However, against the euro, it traded at 89.09 pence. The BoE's Monetary Commission voted 9-0 to leave interest rates at 0.75 percent. Interest rates are expected to say the same, only with a change expected after Britain leaves the EU in March 2019.

Friday 14th September

China welcomes US invite for trade talks
China says it welcomes an invite from the US to discuss trade after the US threatens this week that it is prepared to increase tariffs on $200 billion worth of Chinese goods. The Trump Administration has invited Chinese trade officials to restart trade talks. This has been met with welcome with more than 60 percent of U.S. companies polled saying the U.S. tariffs were already affecting their business operations, while a similar percentage said Chinese duties on U.S. goods were having an impact on business. And the European Union Chamber of Commerce in China released its own survey on Thursday saying the tariffs were causing “significant disruptions” to global supply chains and “seriously impacting” non-Chinese and non-American companies. From this announcement of talks to happen it has caused a resurgence in Chinese stocks and currency.


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