Weekly Market Update

Author : Rachel Poole
Date : January 11, 2020

Market Action

Global equities continued their record run this week. The Dow Jones crossed 29,000 for the first time ever on Friday. The yield on the US 10-year Treasury note rose two basis points to 1.84% while the price of a barrel of West Texas Intermediate crude oil declined $4.50 to $59 as tensions between the US and Iran have eased over the week. As measured by the Chicago Board Options Exchange Volatility Index (VIX), Volatility fell to 12.3 from 14.

In retaliation to the drone strike launched by the United States (US) which killed Iran’s top general Qassem Soleimani, Iran attacked two US military bases in Iraq. US President Trump reported in his address to the nation on Wednesday that there were no casualties as a result of Iran’s attack and that Iran appears to be standing down. Continuing the tit-for-tat fight, Congress imposed fresh sanctions on Iran and Iran has ended its compliance with the Joint Comprehensive Plan of Action, more commonly known as the Iran nuclear deal.

To add yet another disaster to the list of events which have unfolded in the Middle East over the last two weeks, a Ukrainian commercial plane crashed shortly after takeoff from the Tehran airport in Iran. All 167 passengers and 9 crew members died in the crash which multiple investigations have revealed was caused by an Iranian missile. Iran admitted on Friday night that they “unintentionally” shot down the plane.

The United Kingdom’s House of Commons approved Prime Minister Boris Johnson’s Brexit bill. Britain will officially be leaving the European Union (EU) on January 31st. The looming question now is whether 11 months will be long enough for Britain to reach a trade deal with the EU.

Wildfires have been raging across Australia for weeks now. So far, 27 people have died, nearly 2,000 homes have been destroyed, and billions of animals have perished. The fires have burned more than 30,000 square miles of land, a size comparable to South Korea, and are not expected to stop anytime soon. Analysts have predicted that the fires have caused nearly $4.5 billion in damages.

Updated Market Return Figures

What Could Affect the Markets in the Days and Weeks Ahead

Taiwan will hold presidential elections this weekend. Incumbent President Tsai Ing-wen, who favors formal independence from China, leads in polls against opposition candidate Han Kuo-yu, who favors close ties with Beijing. Aside from China’s power struggle with Taiwan, the country’s role in global high-tech supply chains is another reason to watch the election.

Chinese officials confirmed the signing of a phase one US-China trade deal on January 15th at the White House. Also next week is the release of Chinese trade figures which will reveal how much damage the US-China trade war has done to China’s economy.

Speaker of the House, Nancy Pelosi, announced she will be sending the two articles of impeachment to the Senate in the next few days. The impeachment trial against US President Donald Trump could start as early as next week. President Trump’s removal from office seems unlikely given that two-thirds majority of the Republican-led Senate is required to convict him.

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