“Referendum is a device of dictators and demagogues,” Maggie T quoting Attlee

Another eventful week in equity markets, one that saw a divergence in performance between the UK larger and smaller-cap indexes. The FTSE 100 fell as sterling rose, the FTSE 250, less internationally exposed, made modest gains. Indexes around the globe finished broadly lower on Friday. Take your pick from the Chinese economy growing at its slowest quarter since 1992. Brexit uncertainty, a lack of news flow from the Chinese US trade talks, continued tensions in the Middle East, weak US Manufacturing data or Germany cutting growth forecasts, as catalysts. Technology stocks, in particular, came under the cosh. On the plus side, the release of the summary of commentary on current economic conditions by Federal Reserve District, otherwise known as the “Beige Book “, suggested the US economy expanded at a modest pace through the end of August.

Earnings season will go into full swing in the coming week, so far 15% of the S&P 500 reported earnings. According to Factset, 84% of the companies that have announced, reported earnings above expectations. In the coming week, approximately 25% of the S&P 500 are due to report. Analysts are forecasting earnings to decline year on year by 4.7% for this quarter.

Brexit and Woodford were the dominant topics of the previous week. Despite the weekend events, one still gets the sense that Boris Johnson’s deal is gaining some momentum to yet get approved. Although, after the recent rise, and the remaining uncertainty as to whether the EU will grant an extension, or the possibility will still leave without a deal, may see sterling give back some of those gains on Monday morning.

There was an awful lot written about the downfall of Neil Woodford, the man often introduced by the media as a “star fund manager”. Portfolio managers have seen a steady movement from active to passive, partly on performance and partly on fees, over the past years, this fall from grace will probably encourage that transition further. The likelihood will also be further regulation for portfolio managers.

Looking for the week ahead, Brexit will continue to dominate, as will earnings season. We also get the flash Purchasing Managers surveys, offering further indications of the outlook for the global economy. The ECB meeting this week, no changes are expected to monetary policy, the press conference, the last of Mario Draghi before Christine Lagarde takes over, will probably add more insights. Although Mr Draghi will probably be keen not to leave the new incumbent a hostage to fortune.

The Peoples Bank of China will provide an update on is new loan prime rate, which has been set at 4.2%. This was set up to steer borrowing costs lower in response to the trade uncertainties. It is possible we may get further indications of the Peoples Bank attitude to additional monetary policy stimulus for that economy.