After a positive start to the week on news that President Trump and President Xi Jinping had called a 90-day truce on further trade war escalations, enthusiasm halted as doubts emerged as to how concrete any agreements between China and the U.S. actually are. Concerns emerged after the CFO of Huawei, a Chinese technology company, was arrested in Canada on allegations of violating U.S. law, threatening an already fragile relationship between the two countries. In true Trump style, the President however tweeted late on Thursday evening that Beijing was “full of confidence that an agreement can be reached within the next 90 days.” “I agree!”. He also stated that America is going to have a “real deal” or “no deal at all” with China.

Federal Reserve Vice Chairman, Richard Clarida said that the U.S. economy is in good shape and the outlook is solid, adding that policy is meant to sustain the economy’s current good performance. The Fed’s Beige Book report showed that most districts reported modest or moderate economic growth in recent weeks, though four regions said growth had slowed or was “slight”.

Prime Minister Theresa May’s Brexit deal vote will go ahead on Tuesday, with the possibility of the U.K. ultimately having a second referendum on leaving the EU increasing, should the deal not be passed.

Finally, the action-packed week ended with an OPEC agreement to cut oil production by 1.2 million barrels per day for the first six months of 2019 and Novembers’ U.S. job report which showed slowing job gains, but strong enough to maintain a record low unemployment rate of 3.7%, without signs of an overheating U.S. economy.

For the week, global equity markets were under pressure with the Dow Jones (-4.50%), S&P 500 (-4.60%), NASDAQ (-4.93%), Euro Stoxx 50 (-3.52%), FTSE 100 (-2.90%), Nikkei 225 (-3.01%) and Shanghai (-2.00%) indices all ending the week negatively.

Market Moves of the Week:

Source: FactSet

Locally, South Africa recorded GDP growth of 2.2% in the third quarter, lifting the country out of recession. Eskom remains a major threat to South Africa’s economic recovery with load shedding returning to the country. Annual electricity consumption registered a rise of 2.2% in October compared to annual production growth of 0.8%.

South Africa’s National Assembly approved a lawmakers’ report that favours changing the constitution to make it easier to expropriate land without compensation. There were 209 votes in favour of accepting the report and 91 against.

The JSE All Share Index ended the week 0.74% higher, with industrials (+0.51%) and resources (+4.24%) stronger, whilst financials (-2.25%) were weaker. The rand came under pressure, ending the week at R14.16 to the U.S. Dollar.

Chart of the Week:

A segment of the U.S. yield curve inverted for the first time in more than a decade this week, as investors doubt how much longer the Federal Reserve will keep raising interest rates. The yield spread between three- and five-year yields turned negative for the first time since 2007. Curve flattening has signaled investors’ concern that rising rates could harm the U.S. economy. It is important to note though that a more reliable yield curve measure is the difference between 3-month rates and 10-year rates. This measure has flattened, but it has not inverted.

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Have a great week!

The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any Strategiq product. Strategiq Capital is an authorised financial services provider (FSP 46624).