Summary for the 1st of February


President Trump, The US Trade Representative (Robert Lighthizer) and The Secretary of the Treasury (Steven Mnuchin) held a meeting yesterday with Liu He, China’s trade negotiator. They reported that the meeting was going well with constructive talks. There was substantial progress on some of the difficult issues like Chinese government subsidies to state owned companies, the forced transfer of technology through joint ventures for foreign companies that want to invest in China. There is about one month away until the deadline for the US import tariff increases from 10 % to 25 %, and still nothing specific about the progress of the trade talk between the two countries. Lighthizer and Mnuchin will be having another meeting with China again in about two weeks.

The Chinese’s Caixin Manufacturing Purchasing Managers Index(PMI) shows a decline of 1.4 points to 48.3 in January, the lowest level since February 2016, the market was expecting a decline to 49.5. The need for government’s interventions is increasing. Tax relief, public investments and expansive monetary policy have all already been implemented, but the effects still haven’t materialized.

The GDP in the EU grows by 0.2%, quarter to quarter, as expected by the market, and the same growth rate as the quarter before. The same temporarily factors as in the third quarter have been slowing down the growth in the fourth quarter. The vehicles industry has been consistently weak after the latest emission regulation was implemented. Consumer spending also is lower due to a higher energy price. The value for new orders shows strong numbers from the vehicles industry and the high energy price is starting to come down. Analysts believe the activity in the EU area will be picking up forward. The unemployment rate is unchanged at 7.9% in December and a decline of 0.6% for 2018, and 75 000 jobs have been created in December.

Indices on 1st of February: The Dow ended in red due to DuPont’s earnings warning. S&P500 and Nasdaq ended in positive from companies earnings and investors regained their interests in dividend stocks due to a lower projection on long term rate.

Dow: -0.1% (31st)
S&P 500: +0.9% (31st)
Nasdaq: +1.4% (31st)
Nikkei: Unchanged (1st of February)
Chinese indices: +2.2% (1st of February)
STOXX Europe 600 Index: +0.29% (1st of February)

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