09 December 2024
If you are covering the latest news in financial markets, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
Assad regime collapse and regional implications
“Markets are calm in digesting the news that the Assad regime has finally collapsed, in a move that weakens allies Russia and Iran and may yet lead to further shifts in the regional balance of power in the coming days. Oil prices remain low at around $71 in a week that could see OPEC+ production further cut as weak demand, combined with growing global supplies, have led to price weakness in recent months despite pockets of unrest.
Trump signals stability at the Fed
“In a weekend interview, Donald Trump has said he has no plans to remove Fed Chair Jerome Powell, signalling a turnaround from earlier statements describing him as ‘the enemy’ and offering open criticism of policy decisions. This is significant because at last month’s meeting, when rates were cut by a quarter point, the main headline to emerge from the press conference was that when asked, Jerome Powell said he would not resign if asked to by Donald Trump. This could potentially have cued up an awkward stand off which likely would have dented faith in what is a key global financial institution.
Tariffs as a multi-use tool
“Trump’s interview also highlighted how he views tariffs as somewhat of a multi-use tool that he believes can help deal with border security and global peace negotiations, a further signal of his transactional approach. This does however dent the idea that he will pursue the concept of a universal tariff, which wouldn’t allow for specific deals to be struck on what is clearly a wide range of policy objectives.
Weak inflation data from China
“Data out this morning from China showed that inflation has fallen to a level of just 0.2% year on year, which is lower than had been expected, with factory prices also down 2.5%. This signals that demand remains weak. However, examination of the detail shows that fresh food prices fell 2.7% with record warm weather cited as the reason for lower prices. Stripping this out, core inflation gained 0.3% year on year, still weak but an improvement on the two prior months. Clearly, further consumer-focussed stimulus is needed, but perhaps we are seeing the very early signs that efforts which have so far been focussed further up the economic value chain are beginning to be felt in some small way.”
