FTSE flat after Wall Street rebounds on corporate earnings
Fiona Cincotta July 20, 2018 4:35 PM
Trump talking down the dollar, plus threatening more tariffs and a devaluing of the yuan by the PBOC has sent a chill through the markets; intensifying the gravity of the trade war and sparking fears that the trade war could quickly become a currency war.
Despite a stronger start for the FTSE, investors turned cautious and the index followed its European counterparts into the red, before returning to the flatline. Trump talking down the dollar, plus threatening more tariffs and a devaluing of the yuan by the PBOC has sent a chill through the markets; intensifying the gravity of the trade war and sparking fears that the trade war could quickly become a currency war.
And Trump didn’t stop there. A threat of additional tariffs on $500 billion worth of Chinese imports was enough to secure a deepened selloff in Europe and a gap lower at the start of trading on Wall Street. After several sessions of trade war silence, rhetoric has kicked off again with a bang, increasing flows into safe havens such as Gold, which has rebounded off yearly lows and the Japanese yen.
Pound Through $1.31 On Dollar Weakness
The weaker dollar was giving the pound a much-needed boost, propelling it back over $1.31 for the first time since Wednesday. After a string of weak data and growing concerns of a no deal Brexit, the expectation of a rate rise from the Bank of England when they meet in two weeks has dropped significantly, from close to 80% at the beginning of the week, to just a coin toss by the end. More no deal Brexit headlines over the weekend could see this latest rally quickly unravel as the new weeks begins.
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