Global equities have rallied since the weekend after the US Department of Commerce extended the grace period during which Huawei can continue to trade with American companies. Relaxing restrictions on the controversial Chinese company is perceived as a conciliatory gesture from the US ahead of the two superpowers' trade talks next month.

Markets have also been influenced by Donald Trump's pressuring of the Federal Reserve. The President said that the central bank should cut interest rates by “at least 100 basis points, with perhaps some quantitative easing as well”. The S&P 500 closed up 1.2% yesterday and the FTSE 100 rose 1.1%, with French and German headline indices moving in line.

Investor optimism yesterday was in stark contrast to last week's mood. Last Wednesday, Wall Street fell around 3% after a spate of negative economic stories coincided with inversions in the US and UK yield curves, moves which have historically pointed towards recession. China's industrial output dropped to its lowest rate of growth in July for 17 years; UK inflation moved above 2% in July, making it harder for the Bank of England to justify a rate cut; and Germany revealed that its GDP shrank by 0.1% in the second quarter.

Since then, Germany's central bank warned that the economy is likely to shrink this quarter as well, which would put Europe's largest economy into recession. The country's manufacturing sector has struggled with a slowdown in global growth and the trade war.

In a letter to Donald Tusk, President of the European Council, Boris Johnson has demanded that the Irish backstop must be scrapped because it is “anti-democratic” and would undermine the Northern Irish peace process. The Prime Minister advocates the use of technology to avoid a hard border and says he still hopes to leave the EU with a deal.

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