This week, US stocks have been relatively flat as investors waited for the beginning of the earnings season. As shown below, the Dow was a laggard, mostly because of the problems Boeing is facing. This article will look at the week’s biggest stories.
Arab Spring 2.0
In the past few weeks, the Middle East has not been at ease. It started with Algeria, where demonstrations ended the career of the ailing Abdelaziz Bouteflika. He had started his presidency in 1999 and had planned to extend his rule. This is despite the fact that he has not been in the country since 2013. This was followed by demonstrations in Sudan. Yesterday, the military ended the career of Omar Bashir, who has been in power since 1989. In Libya, forces loyal to Khalifa Haftar are approaching Tripoli, where fighting is expected. Due to the size, there is a likelihood that the fighting will be large, leading to the death of many people. The implication of this is that the crisis in the region could continue, leading to the disruption of the crude oil industry. If this happens, it will lead to a rise in the price of oil. The chart below shows the trend in the oil market this week.
The Federal Open Market Committee (FOMC) released the minutes of the March meeting on Wednesday. The minutes showed that the members were concerned about the slowing economy. They were concerned about the soft economic numbers like the industrial production, retail sales, and consumer confidence. Therefore, they decided not to raise interest rates this year. They also left the doors open to a rate cut. The chart below shows the performance of the dollar index this week.
Brexit was still in the news this week. In a meeting with European leaders, Theresa May requested for another extension. This prevented the country from having a no-deal Brexit today. The EU leaders, agreed to give the prime minister a six-month extension. While the delay provided relief to the EU supporters, it introduced fresh concerns that the extension could extend the uncertainty about the future of the UK. Investors are asking themselves about what will happen in the next six months that could not have happened in the past few months. The chart below shows the performance of sterling against the USD and the euro.
As the US-China talks nears an end, the focus has been shifted towards Trans-Atlantic trade relations. This week, the US said that it will add tariffs to EU goods worth $11 billion. This emerged from a case that the US won in the World Trade Organization. Trump also sent a few tweets condemning the EU, which is a so-called ally of the US. Yesterday, EU leaders instructed the European Commission to start negotiations with the US. However, these negotiations will focus on the industrial goods. The US has insisted that agriculture has got to be in the negotiations, a move that has been rejected by EU countries that do a lot of agriculture like France. The chart below shows the performance of the EUR/USD pair this week.