This week, global stocks rose as investors continued to pay close attention to the trade negotiations between United States and China. In the past three days, China’s Liu He has been in Washington, meeting with US negotiators on a deal. Yesterday, he met with Donald Trump. The expectation was that the two countries will make a deal this week. However, yesterday, Donald Trump tampered with this expectation and said that the deal will be reached within the next four weeks. Investors hope that the deal will result in a fairer treatment of American firms in China. They also expect that China will adhere to the outcomes of the deal.
This week, the results of the investigation on the crash of the Ethiopian Airlines were released. The company announced that the main problem was related to a faulty sensor, which activated the MCAS system. This system is activated when the pilots activate the autopilot system. In this case, the sensor directed the plane to push the nose down and because it was at a lower altitude, the pilots did not have the clearance to pull the nose up and stop the crash. Yesterday, Boeing CEO apologized to the customers and the families who lost their loved ones. It is not yet clear how much money the company will be forced to pay in fines.
Brexit was another important topic this week. This is because last week, the members voted against all the motions that were presented to them. They also rejected the proposal by Theresa May for the third time. Therefore, because no deal has been voted for, the country is expected to leave the European Union on 12th of this month. In response to this situation, Theresa May changed tactic and started consulting the opposition Labour party. She also announced that she will seek another extension to avoid the country from having a no-deal Brexit. Still, this issue will continue being a thorn in the flesh for the markets.
This week, Donald Trump plan of reshaping the Federal Reserve continued. Previously, he had nominated Stephen Moore to become a board member. Moore is a visiting fellow at the Heritage Foundation, which is a conservative think tank. He has been criticized for his previous predictions and also the previous tax-related issues. Yesterday, he announced that he will nominate Herman Cain, a former pizza chain CEO and a major conservative operator to the Fed. Since Trump has regretted the appointment of Jerome Powell as Fed Chair, he wants to provide balance by nominating loyalists.
The Reserve Bank of Australia (RBA) was the only major central bank to make an interest rates decision. As expected, the bank left interest rates unchanged and pointed to a more dovish outlook. This is despite the good data released from the country and China, its biggest trading partner.
The employment numbers from the US will be watched closely today. This is because they will tell the markets whether the economy is indeed softening. Traders expect the economy to add about 170K jobs, which will be much higher than the 20K released in the previous month.