In the U.K., the general election campaigns have resumed in the wake of the terrorist attack in London on Saturday night. Obviously, the general election will go ahead as planned on Thursday.
The latest Observer Opinion poll says the Tory party has now a 13-point lead, with 46 percent share of the vote.
The Anglo-U.S. relations, which were affected by the leaking of sensitive information in the wake of the earlier Manchester terrorist attack on May 22 may be further affected by President Donald Trump’s criticism of Sadiq Khan, the Mayor of London, via Twitter
The general reaction in the U.K. is likely to continue to reflect an overuse of the British slogan of 1939 “Keep calm and carry on.”
They were the words on a motivational poster produced by the British government in 1939 in preparation for World War II and that were intended to raise the morale of the British public, threatened with widely predicted German mass air attacks on major cities.
The U.K. services PMI slowed in May while the final IHS Markit Eurozone PMI Services Business Activity Index edged down a little bit to 56.3 in May 2017 from 56.4 in April.
The moves are still very limited and still show a continuation of far more strength than the real economic data reveal.
Nevertheless, some sentiment indicators globally have started to revert closer to levels that approximate economic reality, which for example can be seen in the China Caixin General Services PMI.
Meanwhile, there is a developing situation whereby Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt have cut off their diplomatic as well as their non-oil economic ties with Qatar. All four countries have suspended their air, sea travel while the Saudis have shut their land border with Qatar, which has never happened before.
The UAE, Saudi Arabia and Bahrain have given 14 days to Qatari residents and visitors to leave their borders, while Qatari diplomats need to exit within 48 hours.
Qatar is one of the world’s richest countries and is of strategic importance. The U.S. has military bases in Qatar as well as in Bahrain. Qatar is accused of meddling in the internal affairs of Saudi Arabia, the U.A.E., Bahrain and Egypt and its ties with Iran and Islamist groups in the region.)
This still a developing event, but that brings geopolitical risks back into perspective which could be of importance to investors.
Speaking at a news conference in Sydney, Australia, Secretary of State Rex Tillerson said it’s important that the Gulf states remain unified while he encouraged the various parties to address their differences saying: “What we’re seeing is a growing list of some irritants in the region that have been there for some time. Obviously, they’ve now bubbled up to a level that countries decided they needed to take action in an effort to have those differences addressed.”
This time around, Saudi Arabia cited Qatar’s support of “terrorist groups aiming to destabilize the region,” including the Muslim Brotherhood, Islamic State and al-Qaeda. It accused Qatar of supporting “Iranian-backed terrorist groups” operating in the kingdom’s eastern province as well as Bahrain.
Oil has come back down from its initial surge on the news.
Etienne "Hans" Parisis is a bank economist who has advised global billionaires and governments on the financial markets and international investments.