Publication date: 5 May 2018 | Covering: April 2018
Monthly Briefing
- US-China trade tensions: Tariff threats and counter-threats through April; negotiating teams begin talks
- US, UK, France strike Syria April 14: Chemical weapons sites targeted; limited market impact
- Facebook congressional hearings April 10–11: Zuckerberg testifies; data privacy regulation in focus
- US equity markets volatile; technology stocks under pressure; Q1 earnings broadly positive
- US employment solid: Unemployment 4.1%; strong labour market supports Fed June hike expectation
- BOJ steady; Jamaica IMF programme on track; NHT J$6.5 million ceiling; rates 0, 2, 4 per cent
US-China Trade Tensions and the April Diplomatic Dance
April 2018 saw the US-China trade confrontation shift from tariff threats to an early phase of diplomatic engagement, though without resolving the underlying tensions. The month opened with a further escalation of tariff rhetoric: the United States announced an additional tariff list covering US$100 billion of Chinese goods, and China threatened proportional retaliation. But by mid-April, both sides had agreed to send senior negotiators to begin trade talks, and US Treasury Secretary Mnuchin indicated a visit to Beijing was possible. The back-and-forth of tariff threats and negotiating gestures created considerable uncertainty for global markets and business investment decisions, even as the formal implementation of tariffs was still largely pending. The March 22 announcement of Section 301 tariffs on Chinese goods and China’s announcement of retaliatory tariffs on US goods had set the confrontation in motion, but the April negotiations kept the actual tariff exchange in temporary suspension.
The United States, United Kingdom, and France conducted joint strikes on Syrian chemical weapons facilities on 14 April, in response to a chemical weapons attack on the Syrian town of Douma on 7 April. The strikes were limited in scope, and markets responded with equanimity: the geopolitical risk premium added to oil prices was modest and short-lived. The Syria strikes did not escalate into a broader confrontation with Russia, which had warned against US military action, and the immediate geopolitical temperature subsided within days. For Jamaica, the episode underscored the degree to which Middle Eastern geopolitical risk remained a persistent backdrop to global energy markets and financial conditions.
Technology Under Scrutiny and US Economic Resilience
Facebook CEO Mark Zuckerberg’s congressional testimony on 10 to 11 April, following revelations about the Cambridge Analytica data breach and the misuse of user data for political profiling, placed the technology sector under regulatory scrutiny. Technology stocks had already been under pressure through March and April on concerns about data privacy regulation, competitive dynamics, and questions about the sustainability of valuations after years of exceptional performance. The S&P 500 technology sector declined meaningfully through the first quarter as investors reassessed concentration risk in the mega-cap tech names that had driven bull market returns. Despite the equity market volatility, first-quarter corporate earnings releases through April were broadly positive, with S&P 500 companies reporting strong profit growth reflecting the benefit of the December 2017 tax reform.
Jamaica’s Mortgage Market Through April
Jamaica’s residential mortgage market maintained constructive conditions through April 2018. The Bank of Jamaica’s accommodative monetary policy stance continued to support domestic credit availability, and the NHT’s J$6.5 million individual ceiling and 0 to 4 per cent rates remained the centrepiece of affordable housing finance. Jamaica’s fiscal programme continued on track, with the government maintaining its IMF programme commitments. The improving macroeconomic environment — with stronger growth, lower unemployment, and improving public finances — supported household income and mortgage affordability, and the property market remained active with demand outpacing supply in key urban and suburban corridors.
Looking Ahead
The Federal Reserve’s May 1 to 2 meeting will provide the next policy signal, with no rate change expected and the focus on the statement’s characterisation of inflation and the economic outlook. The US-China trade dispute remains the dominant medium-term external risk, with the actual implementation of tariffs on either side the key trigger for a more severe market response. For Jamaica, the combination of global trade uncertainty and a tightening US rate environment requires careful monitoring of the external financing conditions that affect the island’s sovereign and corporate borrowing costs.
Mortgage & Housing Finance Disclaimer: This publication is for general information only and does not constitute mortgage, financial, legal or investment advice. Mortgage products, lending criteria, interest rates and borrowing costs vary between lenders and may change without notice. Readers should obtain independent advice from a qualified mortgage adviser, financial adviser or legal professional before making financial or property decisions.
Follow Jamaica Homes on Youtube @jamaicahomes and Instagram @jamaica_homes and on Facebook @jamaicahomesnews Send us a message or email us at onlinefeedback@jamaica-homes.com or editor@jamaica-homes.com
Visit our YouTube Community ↗