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Aug 02, 2019

The week in investor relations: Global markets in a spin over Trump’s tariffs

This week’s IR-related stories from around the web

At the start of the week, Hong Kong’s Hang Seng Index suffered its worst fall in a week based upon growing worries among investors over how the city’s massive protests could hurt the regional economy, reported CNN.

But US stocks closed little changed on Monday as investors tempered their expectations with US-China trade talk expectations taking place, while awaiting the big Fed rate decision on Wednesday reported CNBC.

ETFs with a so-called ‘gender lens’ are on the rise – in both size and number – according to the Financial Times, driven by a number of factors: Women’s growing control of wealth and investment decisions, the #MeToo campaign and slow progress on inclusivity in corporate leadership.

Assets in US passive funds are set to equal those in actively managed products: but there is debate in what year that will be achieved, with one study by PwC saying parity will be achieved by 2025, while Moody’s finds that it will be reached four years earlier in 2021, reported the FT. Time, as they say, will tell.

The London Stock Exchange Group bought data provider Refinitiv for $27 bn, which will turn the bourse into a global markets and information powerhouse, reported the FT.

The ramifications of Mifid II have been much discussed, but IR Magazine revealed that more than 300 firms have lost sell-side research completely as result of the regulation. But the benefit is that coverage is now reportedly of a higher quality. Mifid II was also among the many, wide-ranging issues discussed at the IR Magazine Think Tank – Europe 2019.

Mid-week saw trade talks between the US and China turned into a ding-dong with each side making disparaging comments about the other, reported the FT, resulting in in a lowering of expectations over an agreed deal.

Stock futures were given a boost Wednesday on the back of good earnings from Apple, which exceeded analyst expectations, reported CNBC.

It was also the day that it was revealed that the Eurozone’s economy showed signs of a slowdown, boosting the chances of the European Central Bank to launch stimulus measures sometime in September, reported the FT.

Wednesday was also referred to as ‘Fed decision day’ as commentators pondered over the likeliness of an interest rate cut. Prior to the announcement the New York Times presented a guide to what to look out for.

When the decision came, it was a cut: by 0.25 basis points to 2.25 percent. The Washington Post noted that this Fed cut was the first interest rate reduction since 2008, but the paper warned that there were confusing signals about what is next for the Fed.

In the same way, the FT focused on how the post-announcement press conference muddied the waters for investors, when Fed chairman Jay Powell said that the move was a ‘mid-cycle adjustment in policy’ – not the start of a full-blown easing cycle. The Daily Telegraph focused on the politics of the decision, highlighting how President Donald Trump was unimpressed by the move.

As soon as the Fed’s big decision was out of the way the pound slipped, ahead of the Bank of England’s decision to cut or not to cut interest rates. The bank left interest rates unchanged at 0.75 percent, but cut its forecast for UK growth over the next two years, reported the BBC.   

But the bad news did not stop there. Come Friday, global markets were in a spin, with European equities seeing a massive sell-off as President Trump imposed greater tariffs on $300 bn worth of China goods. The FT focused in on Germany’s 10-year Bund hitting a record low. The Telegraph warned that there will be no be quick resolution to the trade rift.