FTSE lower ahead of key G20 meetings

Nervousness is building about the outcome of the meeting between the US and Chinese presidents at the G20 summit this weekend and the market is becoming less and less convinced that the heads of the world’s two largest economies will find some middle ground.

European gauges are lower across the board, positioning themselves for a negative outcome in the talks. In London, mining companies in particular are bearing the brunt of those concerns.

Trump and his counterpart Xi Jinping will sit down for a working dinner on Saturday evening where the agenda will cover a much broader scope of issues than trade. The US grievances remain not only over the imbalance in trade but also intellectual property theft and the forced transfer of technology. While China will want to come some way towards the US it will be keen to avoid US dissatisfaction spilling into other sensitive areas such as Taiwan and key shipping lanes in the South China Sea. Some comments from US insiders have indicated that the country is preparing terms that China may find hard to swallow, making hopes of a deal fade.

But also worrying for the market is the fact that China’s manufacturing sector is now teetering on the point of contraction and is just about unchanged from the previous month. Mining companies, oils, agriculture and big industrials all dread this outcome as for many China is their biggest market.

Brent climbs back over $60

Brent crude is trading above the key $60 mark again as traders are building up hopes that Russia and OPEC will reach a deal to cut production ahead of the oil cartel’s meeting in Vienna next week. While Russia seems willing to come some way towards OPEC it is clear that it isn’t prepared to cut output to the point where it starts hurting its income, particularly after a similar agreement in 2016 left the country with the notion that it was losing out on revenue to other OPEC members. President Putin has already said that he is content with oil prices being around $60 implying that if Russia does agree to a cut it will likely be relatively small and potentially slow in being implemented. The Vienna meeting will make clear how much other oil producers are happy to scale back to protect higher prices.