Hopes for a possible Brexit deal was short-lived, after UK Prime Minister, Boris Johnson was forced to ask the European Union for an extension to the Brexit process. At the first Saturday sitting in the House of Commons in 37 years, MPs voted in favour of an amendment withholding approval of Mr Johnson's Brexit deal until legislation to implement the deal is in place.
U.S. third-quarter earnings season kicked off this week with major banks reporting solid earnings against depressed investor expectations. Earnings from JPMorgan Chase and Goldman Sachs surprised on the upside, and investors were encouraged by positive signals from UnitedHealth and Johnson & Johnson.
On the negative side of the ledger, U.S. retail sales disappointed, and the International Monetary Fund (IMF) once again lowered its projections for global growth this year from 3.5% to 3%.
China released a host of economic data during the week. Economic growth slowed to 6% (annualised) in the third quarter (6.1% expected). This marked China’s slowest growth pace since 1992, when the government began releasing quarterly growth data. Retail sales recorded a rise of 7.8% (in line with market expectations) whilst industrial production advanced by 5.8%.
Finally, Turkish President Erdogan agreed to a 120-hour ceasefire after meeting with U.S. officials on Thursday. During the five-day period, U.S. forces are expected to help evacuate Kurds from a 20-mile “safe zone” in the northern part of Syria that the Turkish military is likely to occupy. Once a permanent ceasefire is in place, the U.S. plans to lift Turkish sanctions it implemented at the beginning of the week.
For the week, global equities were mixed. In the U.S., the S&P 500 (+0.54%) and Nasdaq (+0.40%) ended the week in positive territory, compared to the Dow Jones Index’s (-0.17%) slightly weaker close. In Europe and Asia, the Euro Stoxx 50 (+0.27%) and Nikkei 225 (+3.18%) indices were positive, compared to the FTSE 100 (-1.33%) and Shanghai Composite (-1.19%) indices negative close.
Market Moves of the Week
President Cyril Ramaphosa was in London this week where he delivered the opening address at the 6th annual Financial Times Africa Summit. In his address, Ramaphosa spoke of the opportunities the continent presents for investors, how free trade and open borders will benefit the African economy. What was clear at the summit was a growing impatience outside of the country's borders with the lack of symbolic and visible progress to claw back the losses from the past decade.
Eskom announced “load-shedding” again this week as the constrained system experienced plant breakdowns that coincided with higher power demand, resulting in a shortfall of 12,000 MW at weekend. The company stated that it is building emergency diesel supplies, which should see reserves at acceptable levels early next week.
The JSE All Share Index ended the week up 1.18%, led higher by industrial (+1.44%) and financial (+0.49%) stocks, whilst resource shares (-1.66%) were weaker.
Chart of the Week
A key result of the global manufacturing recession in 2019 (and the trade war rhetoric) has been the accommodative response from central banks across the world which has helped ease financial conditions. The chart above captures the clear and material pivot in global monetary policy settings, pointing to a rebound in global manufacturing PMI going into 2020.
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