The US-China trade talks that resumed on Thursday were on the agenda of the markets last week. Due to the negative news flow, sales in the stock markets were monitored until trade negotiations began. However, with positive news about the talks coming, the markets have turned their direction upwards in the last two days of the week.
Earlier in the week, Wall Street reported that the US has blacklisted some Chinese technology companies and that China may limit its shares in public pension funds.
British Prime Minister Boris Johnson during a meeting with German Chancellor Angela Merkel, if the European Union insists that the Northern Ireland stay in the customs union is not possible to reach an agreement on Brexit said that the sale of the European indices earlier this week.
The fact that the US will host Liu, the deputy head of the Chinese delegation at the White House, and that China wants to reach an agreement, brought purchases into the US indices towards the end of the week. In addition to technology stocks, premiums were also prominent in financials, while the 3 major US indices closed Thursday with 0.6% and Friday with a premium of around 1%. In the data calendar, US September CPI releases remained below the expectations.
The euro / usd parity closed the week with premium, with some optimism in the US-China negotiations, more positive statements about Brexit, and the support of the Fed’s interest rate cuts.
The pound gained 1.93% against the dollar on Thursday, as optimistic comments from Europe supported the prospect of a Brexit deal, closing the week at 1.2647 with a 2.55% premium.
The LME copper closed at 1.63% on Thursday, with new hopes for a deal in the Sino-US trade war, which slowed economic growth and reduced demand for copper. LME copper, which continued its upward trend on Friday and tested $ 5825, closed the week at $ 5803 with a 2.29% premium.
The Chinese indices reopened on Tuesday after a one-week holiday and closed the week with premium, with hopes higher.
In his speech last week, FED President Powell stated that the FED will make necessary interventions to calm the money markets and that short-term bond purchases will continue. The minutes of the last FED meeting showed that members were discussing the level of interest rate cuts against rising risks in the US economy. While the members generally agreed that the economic downside risks increased, the uncertainty of trade and the economic weakness in the rest of the world had a negative impact on the American economy.
The new head of the IMF, Georgieva, warned that the global economy “slowed down” synchronously. IMF research shows that trade disagreements could pull global growth down by 0.8% in 2020, Georgieva said.
US President Donald Trump outlined the first phase of the agreement, which was negotiated with China on Friday and would end the trade war. Trump is suspending additional customs duties on Chinese products, while officials from both sides say there is too much work to be done before a compromise is reached. The first phase, which includes agriculture, currencies and intellectual property rights in some aspects, will be the biggest step ever to end the 15-month retaliatory race between the US and China. The additional customs duties imposed by the two countries on imported products caused turmoil in the financial markets and slowed down economic growth. Friday’s statement did not provide details. Trump said it would take five weeks for a written agreement to be reached. Trump also believed that the deal could not be achieved in the process, although he believed it would happen.
On the first trading day of the new week, the war on trade continued to be the agenda item.
Last week, the index rose sharply on Friday, as the prospect of a deal between the US and China was strengthened. Yesterday, however, the news flow that China wanted to negotiate more before the partial agreement led to a decline in risk appetite. Three major indices in the US closed the day with losses of around 0.1%.
In Britain, parliament took office again yesterday. EU officials’ statement that Prime Minister Johnson’s plan is not the basis for the deal shows that the process remains uncertain.
According to the data released this morning in China, the CPI for September, which is expected to rise from 2.8% to 2.9%, was 3.0%, while PPI, which was expected to decline from -0.8 to 1.2%, met the expectations. Chinese indices closed yesterday after the premium closing yesterday.
According to the data released in China yesterday, imports decreased by 8.5% yoy in September, below the expectations of 6.0% decline, while exports fell by 3.2% yoy in the same period.
LME copper was released yesterday after the data released in China showed that demand is weak.