The Monday note - 24 July 2017

• The FTSE 100 closed on Friday at 7,452.9, up nearly 75 points on a week earlier, as investors targeted tech stocks. The ten year Gilt yield stood at 1.18%. 
• China’s GDP growth for Q2 2017 beat expectations at 6.9% on an annual comparison, which equalled Q1’s figure. This was partly thanks to strong factory output, which expanded by 7.6%. 
• UK inflation recorded an unexpected deceleration in June to 2.6%, down from 2.9% in May. Declining fuel prices more than offset inflationary pressures from a weak pound. 
• Toyota plans to begin mass production of a new electric car in China by 2019, targeting the local market. The Chinese government wants a fifth of all new cars to be electric or hybrid by 2025. 

Chief Economist comments: 

China’s economy is strengthening, the US banks are reporting rising profits, and the tech sector is on a roll. The global economy is entering a new cycle, however the UK will claim less of a share of this growth so long as the Brexit uncertainty lasts. Fortunately, some clarity is emerging on post-Brexit trade with the EU, as most senior government ministers now back a transition deal that prevents any Brexit ‘cliff edge’. However, the politicians need to hurry up and agree that deal, so the effects of the global upswing can filter through. The Brexit talks need to progress faster.