FTSE close to the flat line as China seeks sanctions against the US

The FTSE opened the morning trading session up 0.1%, just about holding above the red line as trade tensions between the US and Asian countries take a turn for the worse.

The FTSE opened the morning trading session up 0.1%, just about holding above the red line as trade tensions between the US and Asian countries take a turn for the worse. 

The stakes have moved up in the global trade tariff dispute with China approaching the World Trade Organization to ask for permission to impose sanctions against the U.S., separate from the tariff battle between the world’s largest economies. 

The country wants to impose sanctions of $7 billion a year because of the USA’s non-compliance with a ruling in a dispute over US dumping duties.

Stocks fell across Asian markets this morning, and particularly in Japan as the country has become the latest target of US President Trump’s vitriol about trade. He commented late last week that his good relationship with Japan will end soon “when I tell them how much they have to pay.” 

The Nikkei reacted with a 0.5% drop this morning despite the fact that the yen strengthened marginally against the dollar. 

Pound drops as MPs plan to challenge Prime Minister

The pound continues to seesaw in line with Brexit news. This morning it lost just over 0.2% against the dollar on reports that 50 MPs have met to discuss how to relieve Theresa May of her post. 

Technically Parliament has to pass a Brexit bill before 29 March, the deadline for the UK to leave the Union, but there are other critical deadlines in place between now and then, including the EU summit on 17-18 October by which the UK was expected to have a Brexit agreement in hand. 

But as different parts of the government continue to pull in different directions the country is instead hurtling towards a no-deal Brexit, potentially economically the worst option and one that has kept sterling under pressure since August. 

MPs are expected to call for a vote of no confidence during or after the Conservative party conference in few weeks’ time. A challenge to Theresa May’s leadership would deflect attention from Brexit keeping the focus on who has political power, which in turn would be negative for the pound.

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.