2018 Q2 Report



We’ve scoured the global news headlines to recap the most significant geopolitical and economic events which took place in the second quarter of 2018, as Donald Trump’s unconventional approach to foreign policy sent mixed signals to the financial markets.


Brexit dominated the political agenda in the UK throughout the quarter. Prime Minister Theresa May struggled to come up with a customs deal which would not only satisfy the European Union but would also be acceptable to Tory MPs on both sides of the debate. However, Parliament narrowly passed the EU Withdrawal Bill in June after Mrs May overcame challenges from the House of Lords and the House of Commons. Against this backdrop, the Bank of England decided not to raise interest rates, although a six-to-three split on the Monetary Policy Committee signalled the likelihood of a hike in August – something that was indeed realised.


Despite seeming unlikely in the preceding months Donald Trump became the first US President to meet with a North Korean leader when he travelled to Singapore in June for a historic summit with Kim Jong Un. The summit represented an important step in the thawing of relations between the two countries, although it failed to deliver any concrete outcomes. Meanwhile, the Federal Reserve – the most advanced of the world’s central banks in the monetary tightening cycle – raised interest rates for the second time in 2018 and hinted at two more hikes over the next six months.


Trade tensions continued between China and the US, despite appearing to ease in April as President Xi Jinping offered foreign companies, including the finance and automotive industries, greater access to Chinese markets. Two rounds of talks failed to produce any tangible results, so Donald Trump followed through on his pledge to impose tariffs on Chinese goods. China responded in kind. In other Asian news, the Bank of Japan decided to scrap its goal of raising inflation to 2% by the end of the first quarter of 2020.


The US also introduced tariffs on European steel imports and the EU countered by imposing levies of its own on a range of American goods including motorbikes and whiskey. Turning to economics, the European Central Bank (ECB) decided to leave interest rates unchanged at its April meeting and announced it would scale back its monthly bond-buying programme after September 2018 and end it completely in December.

Latin America

A mid economic reforms, in May Argentina’s central bank raised interest rates three times in eight days to 40%, as it attempted to support the peso and bring down inflation. Elsewhere, populist candidate Andrés Manuel Lopez Obrador topped the polls ahead of presidential elections in Mexico, and the US imposed new sanctions on Venezuela banning the purchase of debt owed to the government and state-run oil company PDVSA.

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