Janet Mui: weekly economic update 10 January

  • The US drone strike on an Iranian general rattled markets in the first week of 2020. Oil spiked higher but has subsequently surrendered its gains as the US and Iran have sought to de-escalate the situation.
  • With the US now the largest oil producer in the world, events in the Middle East have less of an enduring impact on the oil price.
  • The response of gold is a reminder of its value as a portfolio hedge against geopolitical risks.
  • UK economic activity remains subdued, though there are early signs of an improvement in sentiment following last month's election. The pound fell after Mark Carney suggested that the Bank of England would move quickly to cut rates if data did not improve.
  • The US added 145,000 jobs in December, slightly below expectations and the monthly average for 2019. Despite the softening momentum, we think the US labour market remains healthy.

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