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.

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.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.