Mon, 12/03/2018 - 10:36
Welcome to the new-look weekend roundup. We will be covering the top 5 market and news stories that took place while the markets were closed. This week’s edition will focus mainly on the G20 summit in Argentina, plus new developments in Brexit and Italy’s budget.
Trade war cools as Trump & Xi halt tariffs
Perhaps the biggest story to emanate from Buenos Aires was the agreement between Presidents Donald Trump and Xi Jinping to call a halt to the escalating trade war. Both sides declared they would suspend the implementation of additional tariffs that were due to take effect in the new year.
The two leaders agreed to halt the rate hike for a period of 90 days while they try to thrash out their differences. If no agreement is made after this time, tariffs on certain products would be increased from their current level of 10% up to 25%. As part of this weekend’s deal, China agreed to purchase an unspecified, but “very substantial”, amount of agricultural, industrial and energy products from the US.
Chinese State Councillor, Wang Yi, claimed the negotiations took place in a “friendly and candid atmosphere”. He said: “The two sides agreed to mutually open their markets, and as China advances a new round of reforms, the United States’ legitimate concerns can be progressively resolved,” adding that both countries would continue their discussions and work towards the total elimination of tariffs.
G20 leaders unanimously agree to WTO reforms
Members of the G20 have voted in favour of reforming the way the World Trade Organisation (WTO) carries out its operations. In a joint-communique, the leaders acknowledged that the current system was “falling short of its objectives” and recognised there was “room for improvement”.
The agreement, which was far from a foregone conclusion when the summit began, was formed amid intense wrangling by diplomats over the mention of protectionism and the role of the International Monetary Fund (IMF) as a global safety net. The omission of these terms was seen as a victory for the US, though French President Emmanuel Macron claimed that “European Unity on basic principles had helped save the summit”.
Leaders praised the contribution a multilateral trading system had made to international investment, which was cited as an “important engine of growth, productivity, innovation, job creation and development.” However, they said they would support all necessary reform to improve how the WTO works and committed to reviewing progress in the next summit.
May faces new Brexit headache over legal advice
Even an important global summit like the G20 could not save British Prime Minister Theresa May from a fresh round of Brexit hurdles. The embattled leader is now facing the prospect of having contempt proceedings launched against her government if it fails to publish the full legal advice she received on her much-maligned deal with the EU.
The opposition Labour party is accusing Mrs May of trying to renege on a promise made to Parliament that the full legal implications of the deal would be published. Its Brexit spokesman, Keir Starmer, said contempt proceedings would begin on Monday if the government did not back down. The move already appears to have won the backing of Northern Ireland’s Democratic Unionist Party (DUP), which is propping up May’s minority government, plus former Foreign Secretary Boris Johnson.
Meanwhile, Labour also claimed it would start a motion of no confidence against the Prime Minister if her deal fails to be approved by Parliament. The odds of securing an agreement look stacked against her, especially following the resignation of yet another MP on Friday.
Italy upbeat on budget deal with EU
Italian Prime Minister Giuseppe Conte said he was optimistic that his country could agree a deal with the European Union over its controversial budget plans. He claimed both sides were “making more progress at every meeting we have” and said they were “looking at points that could be the basis for a possible solution.”
The government caused market tensions a few months ago by releasing a budget that forecasts a rise in deficits to 2.4% of GDP in 2019. It claimed this action was necessary to prevent the country from sliding into another recession.
Brussels rejected the move, saying it would go against European rules to lower budget debt. The EU subsequently called on Italy to revise its proposals or face disciplinary proceedings that could lead to fines.