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The week ahead (13 July) – Trade deals and banking

Concluding trade deals will be top of mind in Europe this week as the UK and Turkey look close to signing a new trade deal covering manufacturing goods, agriculture and services. Currently bi-lateral trade between the two countries consists of largely manufactured goods (95%) - Turkey was a key provider of PPE to the UK during the crisis. The UK is Turkey’s second largest trading partner next to Germany.

As the British government turns its attention back to Brexit talks this week – a reminder that Britain has to the end of the year to successfully conclude its exist with the EU – there will be a lot of attention on the government to outline its plans to negotiate new trade deals.

As noted on Elevate’s internal advisory call last Friday, Canada has an opportunity to expand its trade with the UK. Last year, Canada exported ~US$15bn in goods and there is room to improve upon this number in a post Brexit world.

Closer to home, market attention will shift to the US banking sector, as the larger banks post their second quarter earnings this week. Overall, we expect to see higher trading revenues from investment banking divisions, as companies looked to secure new credit facilities and bond funding in the previous quarter. However, much attention will be paid to their retail banking arm, both personal and commercial, as investors assess potential future loan losses. Expect to hear some news on additional, permanent branch closures as the overall reduction in branch activity continues to drop and customers accelerate their move to online.

Canadian investors will view these results as a preview on what to expect in the coming quarter at home. RBC, with the larger of the capital market divisions is expected to do slightly better.

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