FTSE stronger as US reaches Mexico deal

As the market in London reopens after the long Bank Holiday weekend the FTSE is starting the week on a stronger note.

The FTSE continues to build on a rally in US markets Monday and in Asia overnight - boosted by news that the US is about to sign a trade deal with Mexico.  

The deal is seen as the first step in the easing of tensions between the US and its major trade partners although some comments by Trump indicate that he is giving Canada, the third partner in the NAFTA trade agreement, the cold shoulder.

It may be too early to make any conclusions as to whether the Mexico deal is a sign of a goodwill that will spread as far as China, although the markets are taking it as a positive sign, particularly given that the US is now pushing the European Union to speed up tariff talks.

The FTSE is trading up 0.67%. In Europe the DAX and the CAC are beginning to head lower despite a positive open.

Lack of trade talk breakthrough sees China stocks slide

Asian markets were also mixed early with the Nikkei trading up, helped by the fact that the dollar is trading close to its lowest level in a month, but with Chinese markets continuing to slide.

The Sino-US trade talks held in Washington last week didn’t yield any breakthroughs and have left the negotiators in a limbo. A lack of resolution between the US and China will continue to hamper any progress in the stock markets because of fears that a prolonged trade war between the countries could cause the global economy to slide into recession.

Dollar still to recover from Jackson Hole

Last week’s gathering of central bankers in Jackson Hole poured a bucket of cold water on the dollar. Federal Reserve Chairman Jerome Powell indicated that the Fed is being cautious about further rate hikes despite an upbeat assessment of the US economy. The speech caused the dollar to slump to a one-month low Monday and the currency continued to nudge lower early Tuesday, trading 0.08% lower against the pound and 0.05% against the euro.

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.