The investment environment remains favourable for risk assets, especially in the emerging markets. Too much attention has been placed on the US-China trade negotiations and not enough on the other trade deals that have been reached such as the Trans-Pacific Partnership Agreement (TPP), the United-States-Mexico-Canada Agreement (USMCA) and the EU-Japan Trade Agreement. Global trade volumes have slowed over the last year, but these deals will lead to an increase in global trade in the future. Government debt will remain underpinned by the pause in quantitative tightening and low level of inflation, but the doubling in size of the corporate bond market over last decade presents a potential threat for large capital losses. The latter point was highlighted in Jerome Powell’s recent press conference.

The election results will not be known until Sunday evening, but the outcome will likely be a non-event. This is primarily because the rise of anti-EU parties is already widely anticipated and will not necessarily complicate EU policymaking. Most likely the long-established grand coalition of centre-right & centre-left groupings will concede ground to both Eurosceptic and alternative pro-European parties. The result will be a fragmented but still pro-European majority; a broader coalition that will increase the influence of MEPs that are among the strongest supporters of a closer union. The protest vote in the UK against the mainstream parties will work in favour of Nigel Farage’s Brexit Party. This is already widely discounted in the polls/press and will not come as a surprise to financial markets next week.