UK economy takes nosedive in Q2 after Brexit brinkmanship

London, Jun 10, 2019 ( – Stocks are on the rise today, after a weekend deal between the US and Mexico helps drive risk assets higher. Meanwhile, UK data has disappointed, as April data highlights a potentially tough Q2.               

Stock markets are on the rise today, as the weekend developments between the US and Mexico ramped up buying in haven assets. The threat of a ramp-up in tariffs between the two neighbours risked an expansion of the trade war just as markets had been reacting to the deteriorating US-China trade talks. For now, markets are reacting with relief that the US has not opened up yet another front to their trade war. However, this whole debacle also highlights the worrying fact that Trump sees tariffs as an appropriate tool to utilise in any situation where he feels the US has been slighted in some way. The shift into risk-assets has seen a clear shift towards stocks, yet this comes at a cost for haven assets such as the yen and gold. Another key driver for markets is the recent shift in market expectations for US interest rates, with disappointing ADP and headline payrolls seemingly paving the way for rates to fall faster and further. With the US CPI figure released on Wednesday, markets are likely to remain very sensitive to any data-points which could impact decision-making at the Fed.

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Today’s economic calendar pointed towards a volatile morning for the UK, with a host of data being released on the same day that the Conservative party start the process of finding a new leader and PM. Unfortunately, the picture for economic activity in April is not a pretty one, with GDP, industrial production and manufacturing production all slumping over the course of the month. The one particular area of interest came from the transport equipment sector, with the 13.4% decline providing the biggest decline since 1974. With car plants still shut following the Brexit deadline in late-March, we also saw the inventories boost reverse to signal the beginning of what is likely to be a tough Q2.

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This article was originally published by IssueWire. Read the original article here.

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