Company / Analytics

Analytics, 01 February 2020

Week 5 in Brief

The World Health Organisation (WHO) declared the coronavirus a global health emergency.

Since the crisis emerged oil stock prices have fallen, the Dow Jones Industrial Average headed for a weekly loss of more than 2.2% while the current stock market is showing signs of institutional selling. China’s financial markets are set for a tumultuous return on Monday and stocks and commodities are likely to sink. The Velocity of risk continues to viral in financial markets.

Britain Finally Leaves the EU.

Britain is finally “Taking Back Control” after more than three tumultuous years since the referendum to leave the EU. The country remains bitterly divided, though there is some cause for hope. It’s February and the rest of 2020 will be mainly a “transition period” covered under a deal which ensures the U.K remains part of the single market and customs union. Trade and travel will remain easy and free. But things will change after 31st December 2020. The U.K.’s departure from the EU is a lengthy process and it will take quarters, if not years, to see the real impact on the financial markets. What we know for sure is that the sterling has never recovered from its post-referendum drop. Time will tell whether Britain has “taken back control”, to paraphrase the philosophy most used by the Leave movement in the run-up to 2016’s Brexit referendum.

The Federal Reserve might be on course to disappoint the financial markets this year.

Since early 2019, the Fed has consistently moved in a market-friendly direction with various benchmark rate cuts, expanded balance sheets and lending, all of which eased financial conditions. However, it appears that due to the high valuations and positive sentiments, Federal Policy is carrying a heavy load. Analysts believe that the Fed plans to stop its $60 billion dollar-a-month purchase of Treasury bills, as early as April. This could rattle the markets.

The 2020 State of the Financial Services Industry Report warns that financial institutions in 2020 face a big challenge of creating business for the future from the legacy of today while the 20 Global Risks Report prepared by the World Economic Forum (WEF) warns of long-mounting, interconnected risks of environmental degradation, global health and cyber-related issues that have begun to present themselves and the urgency needed to address them.

The United States is set to begin talks for the first trade deal with an African country.

The U.S. and Kenya are expected to officially announce the start of negotiations on a free-trade agreement next week. This will be America’s first such deal with a sub-Saharan country and is expected to set a template for similar deals with other African nations or continental Africa. According to Macharia Kamau, Kenya’s principal secretary for foreign affairs, the parties expect real progress on an agreement by the third quarter of this year, depending on how the negotiations go.

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