FTSE and European Indices up in early trading

The FTSE and European share markets were up marginally in early trading this morning with the DAX up 0.14% and the FTSE at +0.06%, this despite some consistent selling of Asian stocks overnight, particularly in China. Brent Crude was also seeing some momentum in early trading, up 0.21% at 77.61.

The FTSE and European share markets were up marginally in early trading this morning with the DAX up 0.14% and the FTSE at +0.06%, this despite some consistent selling of Asian stocks overnight, particularly in China. Brent Crude was also seeing some momentum in early trading, up 0.21% at 77.61.

Trade dispute fears hit US stocks

Gains in US energy stocks, driven by further rises in the oil price, have been offset overnight by selling in the technology sector, resulting in a drop of 165.52 points in the Dow Jones. The S&P 500 also ended down at 2,699 despite having been 0.85% in positive territory at one point during the day’s trading in America.

The reversal was caused by ongoing worries about the evolving tit-for-tat trade war spat emerging between the US and China, where the rhetoric seems to be heating up. Threats by the White House to curb Chinese investment in the US seems to have hit technology stocks hardest, with the NASDAQ down 1.5% at 7,445.

Asian stocks followed suit, also dropping to nine month lows overnight, despite the fact that the White House has seemed to be softening its stance slightly on China. The MSCI World Equity Index, considered a good benchmark of equity market sentiment, is down at a three month low, but the USD is up slightly this morning as the market hopes that Trump has been talked down from his earlier tougher stance on China investment.

Some analysts are speculating that part of the US equities sell-off is being driven by the end of the bull market in technology stocks rather than simply trade war fears.

Bank of England rate strategy remains murky

Andrew Haldane, one of the three Bank of England governors who voted in favour of raising UK interest rates last week, is due to speak this afternoon. He had previously been dovish about UK rates, so markets will be interested to see what he has to say. 

The GBP has dropped 9% since April, and traders will want to hear whether there is scope for a rate hike before the end of the summer.

Haldane’s colleague, BoE deputy governor Jon Cunliffe, was playing his cards close to his chest in a BBC interview this morning, although he did admit that household debt in the UK remained too high and the BoE is concerned how UK households would fare in the next recession.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (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.