The French Republican calendar may have only been used for 12 years during the French Revolution but it does show us just how literal the French can be. Brumaire, named after the French word for fog (brume), proceeds the month of Frimaire (frost), coming from the French word frimas. The week that was, straddling both October and November, the equivalent to Brumaire and Frimaire for those French Republicans were true to their names. Markets staged something of a recovery as October’s fog lifted, with some of the worries that had previously rocked markets, starting to thaw.
Perhaps the largest iceberg facing markets of late has been the threat of an escalating trade war between the US and China, stymieing global trade in the process. Fears were eased this week as US President, Donald Trump, commented that a “great deal” could be struck with China. Bloomberg reported that Trump is interested in reaching a trade agreement with Beijing during the upcoming G20 meeting held in Argentina later this month. Markets were buoyed that key US officials have been asked to begin drafting potential terms, with Asian bourses reacting the most positively to the news. Jumping to three-week highs with China shares surging and the Yuan firming, investors were also encouraged by Beijing’s pledge to support private firms as the country’s economy continues to cool. European equities responded favourably to positive Chinese news-flow, with the stock market heading towards its best week in nearly two years.
The excitement was also felt on Wall Street, with the Dow Jones, S&P 500 and tech heavy NASDAQ all gaining over 1%. Not everyone joined the party however, as Apple, the world’s largest company by market capitalisation, tumbled 7% after the closing bell on Thursday. The tech behemoth announced that sales for the upcoming crucial holiday period could miss expectations due to weaknesses in emerging markets and foreign exchange costs, instigating worries that the company is losing its mojo.
It was also a busy week on the domestic front as Philip Hammond delivered the Budget on Monday. Lasting just 72 minutes, the chancellor kept fuel, beer, spirits and cider duties untouched whilst making several key changes to income tax thresholds. Although the headline was that austerity is coming to an end, with GDP forecasts having been raised for 2019 from 1.3% to 1.6%, there were also stark warnings over the detrimental effects a ‘no deal’ Brexit could have.
Mark Carney, Governor of the Bank of England, echoed those sentiments on Thursday as the central bank delivered its inflation report. There was little in the way of surprises from Carney’s address, with rates being held steady at 0.75%.
The week was rounded off with US Non-Farm Payroll data, a key piece of data considered by the US Federal Reserve when deliberating their rate hikes. Although many commentators have been worrying that the US economy is starting to slow, the data was very strong, showing that non-farm payrolls rose 250,000 versus an expected 200,000 and unemployment remained at 3.7%. US wages grew at their highest pace in nine years, increasing at an annual rate of 3.1% in October and increasing the likelihood of another rate rise in in December.