Monday, December 16, 2019

Markets stay cautious on US-China phase one trade deal; BoJ, BoE and PBoC monetary policy decision in the week ahead

Tags
  • China
  • Dollar
  • Pound
  • Stocks

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Market Recap: Markets stay cautious on US-China phase one trade deal; BoJ, BoE and PBoC monetary policy decision in the week ahead

US stocks remained mostly flat on Friday, as investors likely remain skeptical of the announced US-China phase one trade deal that is only due to be signed on the first week on 2020. US trade officials said that China has agreed to increase imports of US goods and services by at least US$200bn on top of 2017's figure of US$186bn over the next two years. In return, the US will not go ahead with the scheduled tariffs on December 15 and rollback some of the earlier tariffs that are currently in effect.

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Global equities surged over the past week, thanks to the partial trade deal. Major US indices made new record highs last week, while the Hang Seng Index led major Asian indices, spiking up 4.49% last week.

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Safe haven assets were mixed on Friday as investors remained cautious about the US-China partial trade agreement details. Gold gained as the dollar fell while the yen fell slightly against the greenback. US Treasury yields fell across the board.

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Sterling spiked on Friday as the Conservative Party took a sweeping victory in the UK general elections. The Tories won 364 out of 650 seats, regaining their majority in parliament. This means that British Prime Minister Boris Johnson will likely be able to pass his Brexit Withdrawal Bill without much resistance in the House of Commons.

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Meanwhile stocks in Asia look set to retreat on Monday morning thanks to doubts on the details of the US-China partial trade deal. The Nikkei and Straits times Index started Monday's trading session 0.26% and 0.01% lower respectively while Hang Seng Index futures lost 0.70% overnight as of Monday 3am (GMT+8).

This week's macro events include monetary policy decisions from Japan, the UK and China. Inflation rates will be released from multiple countries, including the US, UK and the EU.