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Good morning. China is taking action to shore up its economy, the U.K. is hoping to move on and Carlos Ghosn already moved. Here’s what’s moving markets.
Chinese Action
The first phase of a U.S-China trade deal is due to be signed on Jan. 15 and while more phases will have to follow, the focus will now turn to the health and outlook for the Chinese economy. Authorities there have pledged to remain flexible on monetary policy and they continue to make moves to ease funding conditions for local companies in order to spur investment. Keep in mind Hong Kong too, where pro-democracy protests continued apace over the New Year celebrations, as any further escalation here could continue to hit companies exposed to the market.
Ghosn
Until the corporate and macroeconomic newsflow starts to heat up again, Carlos Ghosn is likely to remain on the tips of tongues everywhere. Having enlivened New Year’s Eve for business reporters the world over, now the fallout of his escape from Japan to Lebanon will begin in earnest. Japan is seeking a meeting with Lebanon to discuss the issue and the questions on exactly how he managed to abscond from Japanese authorities and whether he did so in a musical instrument case will continue.
Next Phase
With a Conservative government holding a strong-enough majority to at least add some degree of near-term certainty on Brexit, U.K. politics will now be in a process of retooling itself for its next phase, most pertinently who will lead an opposition Labour Party that was battered in the polls. Still true in 2020, however, is that Britain doesn’t have a monopoly on political turmoil. France’s Emmanuel Macron plans to push ahead with his full pension reform program despite the protests crippling the country, while Spain’s Pedro Sanchez is making another attempt at forming a government, but is awaiting the sign off from his prospective Catalan partners, and Austria will get a new coalition government between the conservatives and greens.
Embassy Attack
The year begins with another geopolitical battle for U.S. President Donald Trump to contend with after the U.S. Embassy in Iraqi capital Baghdad was attacked by an Iran-backed militia. The group broke up its encampment outside the embassy on New Year’s Day but it creates an early headache for the president to tackle as the U.S. continues to be the focus of ire for its tactics designed to reduce the influence Iran has over the region. And none of this takes into account North Korea, which has pledged to debut a “new strategic weapon.” And all in an election year to boot.
Coming Up…
The moves by China’s central bank to shore up the local economy gave stocks a lift in Asia and European and U.S. futures are also pointing to a positive open. The demand outlook for copper has also brightened, which may give miners the world over a boost given the importance of China to that industry. Other assets that closed out strong performances for 2019 may also be in focus. Crude oil had its best year since 2016 and gold ultimately ended with its biggest advance since 2010, though there are doubts as to whether that can be repeated.
What We’ve Been Reading
This is what’s caught our eye over the past few days.
Will 2047 be the end of Hong Kong as we know it? What $10,000 would have returned in 2019. Bitcoin believers think a rally is coming in 2020. Netflix really wants an Oscar. Behavioral scientist, data analyst will be top jobs in the next decade. Private equity is starting the new decade flush with cash. The rise of emerging-market assets and China’s ascension.
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To contact the author of this story: Sam Unsted in London at [email protected]
To contact the editor responsible for this story: Celeste Perri at [email protected]
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