How will markets react to the news surrounding Boris Johnson?

How will markets react to the news surrounding Boris Johnson?

Recent news surrounding tChinese data paints optimistic picture

The latest Chinese economic data came in mostly above expectation with GDP increasisgn compared to the expected as it continued to highlight the strong pace of the post pandemic economic recovery. Meanwhile, retail sales increased 1.7% YoY in December (exp. 3.7% YoY), industrial production was 4.3% YoY higher (exp. 3.6% YoY) while urban investments were 4.9% YoY higher (exp. 4.8% YoY). Furthermore, the PBOC announcend it intends to lower 1-year medium term lending facility and 7-day reverse repo rate by 10 bps in order to provide additional assistance. While this data could be promising, signs of rising infections in China just 3 weeks before the winter Olympics could lead to widespread economic uncertainty, particularly if the situation is not handled effectively in the short term.

Oil retreats at the start of the week

While Oil prices managed to have a positive performance towards the end of last week, with WTI breaking above the $83 resistance area, this week started with a slight pullback for both Brent and WTI. Rising demand uncertainty and the potential increase in global supply continue to pressure oil prices as they manage to remain in the upper limit of the recent trading range. While OPEC is expected to decide on potential production increases soon, markets remain focused on the delicate balance between supply and demand which has appeared to impact price fluctuations quite significantly throughout most of the post pandemic economic recovery. he PM Boris Johnson has led to some additional uncertainty in markets as they try to evaluate the potential impact of such revelations. While a major change in parliament remains unlikely, any serious concern for the stability of the government could have far reaching effects on the economy since it could potentially bring many policy changes. However, it is important to note that the major objectives of the government and the Bank of England are to contain inflation while facilitating the post pandemic recovery, and recent developments are unlikely to shift focus from those tasks in a major way despite them potentially leading to a short term increase in volatility. Furthermore, while in the long term this volatility may be mitigated, it could lead to significant risk aversion by investors in the short term as they try to assess the circumstances and predict potential outcomes.

Tesco continues to show strong performance with Q3 update

Tesco's Q3 and Christmas Trading Statement continues to show strong momentum from the company, with further growth even after the excellent performance seen last year and with the highest share in 4 years thanks to a positive performance both in stores and online. While this has allowed the company to forecast a retail operating profit slightly above the top-end of the previous guidance range, there are several encouraging signs across the economy that could benefit Tesco and which could help justify this optimism if it is able to continue implementing its strategy.

Walid Koudmani

Walid Koudmani

Market Analyst working in UK-Italian-Arabic markets covering a broad range of assets including stocks, commodities, FX and crypto. English, Italian and Arabic Speaker with a B.A in Business Management. Quoted in many prestigious publications including the Guardian, Barrons and Lefigaro and winner of bloomberg top forecast rank Q-2/Q-3 2020.