FTSE higher but trade tensions continue to simmer

The FTSE and European markets started the day mostly higher but the positive tone is masking growing concerns over the escalation of US-China trade tensions. 

Now all major industries are trying to assess how badly they could end up being hurt by the introduction of import restrictions and tariffs particularly the likes of technology giants like Apple, Texas Instruments and Micron Technologies for whom China sales represent a large proportion of their total revenue.  

In London, the pressure on mining and metals stocks has temporarily decreased as the focus switches to sterling and the Bank of England.

BoE seen keep rates flat, for now

The Bank of England is back in the limelight today and is widely expected to keep rates unchanged given that the recent set of economic indicators has been mixed and also given that the Brexit uncertainty is continuing to prevent any meaningful economic recovery. 

Having pulled back from raising rates in May, the question now is will the Bank opt to increase rates in August or will it postpone the decision for later this year.

The anticipation is weighing on the pound, weakening the currency against the dollar 0.15% and against the euro 0.04%

Oh, Vienna

As the Vienna meeting of oil producing countries draws closer expectations that OPEC members will agree on further increases of oil production is keeping oil prices under pressure. 

Russia, though not an OPEC member, has already started pumping more oil as per an agreement with Saudi Arabia, the largest of the OPEC countries. Iran has also indicated that it is in favour of a small increase in output ahead of the OPEC meeting which starts on Friday. 

Brent crude traded down 1.12% at 73.92 but WTI declined less, down 0.82% to 65.16 after US crude inventories this week showed a large decline, signalling strong domestic demand, probably driven by seasonal factors.