12 November 2018
Bassanese Bites: Gridlock – Week beginning: 12 November 2018
Global equities continued their recovery last week, helped by apparent relief that US mid-term elections restored “gridlock” to Washington. With the Democrats controlling the House and the Republicans controlling the Senate, it seems unlikely either side of politics will be able to push through regulations to seriously affect the outlook for a range of sectors, from health care to technology. There was also some relief that the Democrats did not manage to wrest control of the Senate, as this would have raised the risk of Presidential impeachment and a potentially more serious assault on cosy corporate practises.
The Fed and RBA meetings came and went, with no change to the interest rate outlook in either country. The upbeat US earnings season also rolled on. The other major market development was a further slump in oil prices – to test mid-August oil price lows. This likely reflects a market that had become overly bullish due to impending Iran sanctions – only to then get wrong footed by signs of higher supply in both the US and Saudi Arabia and less draconian Iranian sanctions (at least in the short-term) than expected.
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