Markets should get back to basics as geopolitical risks subside

After a week dominated by geopolitics and spent calibrating risk, the coming one should be back to basics.

Following the spike in risk aversion caused by events in Iraq, US stocks and the US dollar ended the week higher, while the price of oil closed lower than before the US drone strike on a senior Iranian commander. With the US and Iran unlikely to escalate things further for the time being, the chances are that direction can once again be set by economic fundamentals.

At least on the key policy issues of 2019 — US-China trade and Brexit — the year started relatively encouragingly, and needed to as the underlying economic backdrop remains a challenging one. 

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