The Major Markets all closed higher again last week with Emerging Markets taking the lead for the second week in a row. The gains were fueled in large part by the confirmation of the Phase One trade deal and the full acknowledgment that the proposed December 15th trade tariffs would be stayed.
While the Phase One trade deal had been agreed upon in concept, there was still some doubt going into Friday’s open whether or not this would be actually happening. However, on Friday the United States Trade Representative announced that the US would be maintaining 25 percent tariffs on approximately $250 billion worth of Chinese imports, along with a reduction in tariffs down to 7.5 percent on approximately $120 billion of Chinese imports.
Additionally, China agreed to buy $200 billion worth of additional US goods and services over the next two years. This includes an additional $32 billion of US agricultural products. And on this news, President Trump announced that negotiations for the Phase Two Deal would begin immediately.
The other significant geopolitical news was the December 12th UK Election. After months of stalemate, Members of Parliament agreed back in October that the voters in the United Kingdom should go to the polls yet again on December 12th to determine the fate of the June 2016 Brexit referendum. In the end, Boris Johnson captured more than enough votes to move forward with Brexit, securing the largest conservative majority since Margaret Thatcher. It looks like the third time’s a charm. After three extension requests to EU, the UK is set to complete the Article 50 separation from the European Union on January 31st, 2020.
By the end of the week, the MSCI United Kingdom Index gained 3.39% and held the second largest weekly return among the MSCI Developed Countries.
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