Market Review - Fundamental Perspective - 19 June 2018

In an otherwise relatively quiet session yesterday, immigration issues were front and centre on both sides of the pond. In the US, various members of the Trump administration defended the recently instituted policy of separating child migrants from their families at the Mexican border (Bloomberg). On the other side of the Atlantic, the DAX fell 1.4% yesterday in response to potential political instability stemming from disagreement within the country’s ruling coalition on the fate of asylum seekers
According to several German media reports, this divergence in views has driven an increase in tensions between the CDU and CSU. For now, Chancellor Merkel has asked for the opportunity to agree a Pan-European migration solution at the EU summit on 28-29 June
Late yesterday, trade tensions between the US and China escalated after President Trump ordered his officials to identify USD200bn worth of Chinese goods for additional tariffs of 10%, with another USD200bn after that if Beijing retaliates. China vowed to retaliate “forcefully” (Bloomberg)
With no critical data today, markets are likely looking ahead to Friday’s OPEC summit. Yesterday member states discussed a potential compromise around a more modest production increase than the estimate previously put forth by Russia. Indeed, although we expect OPEC to agree to raise output and other non-OPEC countries to follow suit, risks to prices are skewed to the upside

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