LAST WEEK – KEY TAKEAWAYS
UK: Supreme Court rules against Boris
- Sterling weakened against the US dollar despite the UK Supreme Court ruling that the suspension of Parliament for five weeks- known as proroguing- by the Prime Minister was unlawful.
- Omnis view: Political uncertainty remains elevated. The government is legally bound to request another extension to the Article 50 deadline if the two sides fail to agree a withdrawal deal by the EU summit on 17th October. However, Boris continues to insist the UK will leave the EU on 31st October. Unless the EU makes concessions that would secure the backing of MPs, it is hard to see how Boris can avoid requesting an extension.
US: Democrats launch impeachment inquiry
- US shares fell after the Democratic Party, which has a majority in the House of Representatives (the lower house of Congress), launched an inquiry into the conduct of US President Donald Trump which could lead to his removal from office- known as impeachment;
- President Trump has been accused of asking the Ukrainian government to investigate the son of Democratic presidential candidate Joe Biden, a potential rival in next year’s election.
- Omnis view: President Trump should survive as impeachment requires a majority of two thirds in the Senate (the upper house) where the Republican party holds control. However, the inquiry could distract him from other more pressing matters such as trade tensions with China (see below).
Trade: Uncertainty weighs on US shares
- US shares rose after President Trump told reporters that a trade deal with China “could happen sooner than you think”;
- US shares handed back some of those gains later in the week after media reports suggested the US is unlikely to extend a temporary permit allowing US companies to do business with Chinese tech firm Huawei and President Trump was considering banning Chinese companies from listing on US stock exchanges.
- Omnis view: The next round of trade talks start in October, but it remains to be seen whether the two sides can make any progress.
LOOKING AHEAD - TALKING POINTS
- Monday- EU unemployment rate in August;
- Tuesday- Japanese unemployment rate in August;
- Friday- US job creation in September; US imports, exports and balance of trade in August.
This update reflects Omnis’ view at the time of writing and is subject to change.