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European markets lower on potential fresh tariffs

Most European gauges are in the red as the US is looking to broaden tariffs on European products including chemicals, metals, whiskies and cheese. The decision hinges on the outcome of the World Trade Organisation’s case over European subsidies for plane manufacturer Airbus and could potentially affect items with an annual trade value of $4 billion. 

The DAX, which is already being hit by the Sino-US trade war and existing US tariffs on German car makers, has lost 0.15% in early trade but the FTSE is in a better shape, up 0.18%, as the slightly weaker pound is helping large exporters.  

Johnson’s strong language hurts pound

Sterling has lost ground this morning, down 0.13% against the dollar after Boris Johnson’s campaign manager laid out his plans for future talks with the European Union, using much more hawkish language. Johnson’s message to the EU is that the bloc can either accept his new free trade proposal or the UK will walk out without a deal. 

While the tone is very much designed to attract grass roots support for the Tory leadership candidate it will backfire in business circles as they see no-deal as the worst possible outcome.

Oil prices are moving in a much narrower range than in the last few trading days as the OPEC still remains in session in Vienna. Investors fully expect that OPEC members will put in place a six month extension to the existing production cuts to try and balance out the declining demand caused by the US-China trade war.
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