The third anniversary of the Brexit referendum came and went in June, and still the issue of Brexit remained up in the air. As the clock ticked towards the extended deadline of 31 October, the Conservative Party focused on the election of a new leader and investors focused on its implications for Brexit.
- The UK economy shrank in April
- President Trump suspended new tariffs on Mexican imports
- The US and China agreed to restart trade talks
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The third anniversary of the Brexit referendum came and went in June, and still the issue of Brexit remained up in the air. As the clock ticked towards the extended deadline of 31 October, the Conservative Party focused on the election of a new leader and investors focused on its implications for Brexit. At the annual Mansion House speech, Chancellor of the Exchequer Philip Hammond warned that, although fiscal and monetary interventions could help to smooth the path to a post-no-deal-Brexit economy, the impact would be temporary and could not prevent the economy from being “permanently smaller” than if the UK left the EU with a deal. The UK economy contracted in April, shrinking by 0.4% from March, and the FTSE 100 Index rose by 3.7% over June as a whole.
“The ECB is becoming more concerned about risks to the eurozone’s economic growth prospects”
Concerns over the US-China trade conflict continued to affect sentiment during June; towards the end of the month, however, President Donald Trump and China’s President Xi Jinping announced at the G20 summit that they had agreed to restart trade negotiations. In the meantime, the US has decided not to impose tariffs on an additional US$325 billion-worth of Chinese goods. Meanwhile, having imposed a rising schedule of tariffs on imports from Mexico in May, President Trump suspended them “indefinitely” as Mexico’s took action to tackle migration. Elsewhere, speculation that the Federal Reserve (Fed) might decide to implement a cut in interest rates gained traction. The central bank warned that uncertainties about the economic outlook had increased and pledged to take action necessary to support US global growth. The Dow Jones Industrial Average Index rose by 7.2% in June.
Policymakers at the European Central Bank (ECB) are considering further monetary stimulus, including a fresh round of asset purchases and additional rate cuts. The ECB is becoming more concerned about risks to the eurozone’s economic growth prospects caused by Brexit-related uncertainties and global trade tensions. The Dax Index rose by 5.7% during June, while the CAC 40 Index climbed by 6.4%.
Despite ongoing trade tensions between the US and China, Japan’s economic growth picked up during the first three months of 2019: the country’s economy expanded at an annualised rate of 2.2%, having grown by 1.8% in the previous quarter. Growth was boosted by an increase in capital spending; however, private consumption declined. Over June, the Nikkei 225 Index rose by 3.3%.
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