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US-Chinese trade talks to continue

Beijing and Washington appear to be on track to diffusing ongoing trade tensions and reaching an agreement.

US-Chinese trade talks to continue

China’s top economic official Liu He is expected to visit Washington for further trade talks in the coming weeks as US President Donald Trump proclaimed “tremendous success” with Beijing.

The positive tone bolstered markets, with the Dow climbing 122 points and the S&P 500 and Nasdaq ending 0.45 per cent and 0.42 per cent higher, respectively.

Jerome Powell continued his latest dovish rhetoric yesterday, 10 January. Speaking at The Economic Club of Washington, D.C., the Federal Reserve (Fed) Chair said the central bank “can be patient and flexible” when it comes to adjusting interest rates if global economy continues to affect the US. Fed Vice-Chair Richard Clarida added the Fed “can afford to be patient” and would react if “crosswinds” persist.

Markets are less confident the Fed will proceed with the previously forecast four rate rises in 2019, suggesting no further increases are likely this year.

Today the UK Office for National Statistics (ONS) will release GDP and manufacturing data. Brexit concerns along with fears of a global slowdown have hit the UK economy of late. Analysts anticipate a sharp reduction in GDP from 1.5 per cent in December  to 1.3 per cent this month and sluggish growth in the manufacturing sector. Any miss in expectations will cause high volatility.

Meanwhile, UK opposition leader Jeremy Corbyn said yesterday that Labour will vote down Theresa May’s “bad deal” and that extending Article 50 “would be a possibility because there would have to be time to negotiate” if the government loses the Brexit meaningful vote next Tuesday, 15 January.

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