FTSE opens higher while European markets remain under pressure

Overnight relief on Wall Street helped the FTSE start the day higher but uncertainty over Italy’s domestic politics continues to cast shadows over European markets.

Overnight relief on Wall Street helped the FTSE start the day higher but uncertainty over Italy’s domestic politics continues to cast shadows over European markets. 

They opened slightly up this morning but then promptly started falling, digesting news that Italy’s president has given the country’s two populist parties more time to form a coalition government, easing fears of a possible snap election in July.

The euro is holding up against the dollar, up 0.45%, although traders remain worried about Italy’s debt mountain and what the repercussions will be for the Eurozone if a populist government is formed in Rome.

Trump talks tariffs on European metal imports

US tariffs will be another major source of concern today, as the Trump administration announced it would not be granting the EU an exemption from upcoming tariffs on imported steel and aluminium coming into the US. The administration had originally delayed imposing the tariffs on the EU but talks have not progressed sufficiently.

The bellicose noises from Washington follow on from the Trump administration saying Tuesday it would still impose tariffs on Chinese imports despite the two countries seemingly reaching some sort of compromise at their recent trade talks only weeks earlier. This could also restrict Chinese investment in the US and what products US companies can sell to China.

UK car manufacturing higher in April

Economic figures from the UK continue to provide a mixed bag of information indicating that the economy is not doing too badly but not well enough for the Bank of England to revert back to its plans to raise interest rates. 

UK car manufacturing was reported up 5.2% in April fuelled by both domestic and foreign demand, somewhat assuaging fears of a slowdown for the key motor manufacturing sector. In all overall domestic car demand was up 7.3%.

But more significantly housing prices are in decline. Nationwide reported that house prices were down 0.2% on a monthly basis in May despite forecasts from economists that they would rise. The pound seems to have shrugged off the news and traded up 0.3% against the dollar.

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