This week, global stocks rose as
investors continued to pay close attention to the trade negotiations between
United States and China. In the past three days, China’s Liu He has been in
Washington, meeting with US negotiators on a deal. Yesterday, he met with
Donald Trump. The expectation was that the two countries will make a deal this
week. However, yesterday, Donald Trump tampered with this expectation and said
that the deal will be reached within the next four weeks. Investors hope that
the deal will result in a fairer treatment of American firms in China. They
also expect that China will adhere to the outcomes of the deal.
This week, the results of the
investigation on the crash of the Ethiopian Airlines were released. The company
announced that the main problem was related to a faulty sensor, which activated
the MCAS system. This system is activated when the pilots activate the
autopilot system. In this case, the sensor directed the plane to push the nose
down and because it was at a lower altitude, the pilots did not have the clearance
to pull the nose up and stop the crash. Yesterday, Boeing CEO apologized to the
customers and the families who lost their loved ones. It is not yet clear how
much money the company will be forced to pay in fines.
Brexit was another important
topic this week. This is because last week, the members voted against all the
motions that were presented to them. They also rejected the proposal by Theresa
May for the third time. Therefore, because no deal has been voted for, the
country is expected to leave the European Union on 12th of this
month. In response to this situation, Theresa May changed tactic and started
consulting the opposition Labour party. She also announced that she will seek
another extension to avoid the country from having a no-deal Brexit. Still,
this issue will continue being a thorn in the flesh for the markets.
This week, Donald Trump plan of
reshaping the Federal Reserve continued. Previously, he had nominated Stephen
Moore to become a board member. Moore is a visiting fellow at the Heritage
Foundation, which is a conservative think tank. He has been criticized for his
previous predictions and also the previous tax-related issues. Yesterday, he
announced that he will nominate Herman Cain, a former pizza chain CEO and a
major conservative operator to the Fed. Since Trump has regretted the
appointment of Jerome Powell as Fed Chair, he wants to provide balance by
nominating loyalists.
The Reserve Bank of Australia
(RBA) was the only major central bank to make an interest rates decision. As
expected, the bank left interest rates unchanged and pointed to a more dovish
outlook. This is despite the good data released from the country and China, its
biggest trading partner.
The employment numbers from the
US will be watched closely today. This is because they will tell the markets
whether the economy is indeed softening. Traders expect the economy to add
about 170K jobs, which will be much higher than the 20K released in the
previous month.
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