Geo-political
Coronavirus update – While the number of cases has seen a sharp increase throughout the week, as China revised its data and a further 15,000 were declared to have the coronavirus, market sentiment improved. Asian shares inched higher on Friday as they were on course to post a second week of gains. The change in sentiment comes as news emerged that governments would make provisions to soften the impact on the economies from the epidemic. The Chinese economy has been hit hard by the coronavirus and is set to grow at its slowest rate since the financial crisis in the current quarter, as economic growth predictions slump to 4.5%, from 6.0% in the previous quarter. Reuters stated that the downturn could be short lived if further outbreak is contained, suggesting that growth is forecast to recover to 5.7% as soon as the second quarter of 2020.
Cabinet Reshuffle – This week the UK has seen several political changes, as Prime minister Boris Johnson led a widespread cabinet reshuffle in preparation for life after leaving the European Union. This was not an orderly reshuffle, as a battle for control over the Finance Ministry lead to Sajid Javid stepping down from his post as Chancellor of the Exchequer. Following the publication of poor growth figures in household spending late last year, with figures at their lowest in 4 years, PM Johnson seems to be backing the idea that if he invests billions of pounds into infrastructure projects he can revitalise Britain’s stagnant economy, the first of which came as he announced that the green light had been given on the HS2 project, which could cost up to £106 bn.
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