FTSE tracks Wall Street lower as dollar strength ebbs

US markets will be closed today due to the 4th of July holiday but that has not stopped action in the US dollar market, where the greenback has seen selling overnight against many major currencies. This could hamper the FTSE today as it will mean a stronger GBP, and the London market reflected this in early trading, down 0.4%.

US markets will be closed today due to the 4th of July holiday but that has not stopped action in the US dollar market, where the greenback has seen selling overnight against many major currencies. This could hamper the FTSE today as it will mean a stronger GBP, and the London market reflected this in early trading, down 0.4%.

Market braces for trade war, China economy worries

There remain worries about the impact of a possible US-China trade war on both the Chinese economy with potential fall out across the wider Asian region. 

Overnight there were some losses on the stock markets in China and Hong Kong, with Shanghai closing down 0.94% and Hong Kong off by more than 1%. Investors in Asia are also worried that the Chinese central bank has had to intervene to prop up the yuan.

In the US markets on Tuesday shares were also feeling the pressure as China has said it will temporarily ban sales from chipmaker Micron Technologies. 

Traders are also aware that new tariffs imposed by the Trump administration on some Chinese goods are due to kick in on Friday. The S&P 500 closed Tuesday down 0.49% with the NASDAQ also off by 0.86%.

Copper prices slide as China demand drops

The big story in the commodities market remains oil, where supply concerns continue to push crude oil upwards. 

Oil was up this morning in early trading at $78.03/bbl. Copper is taking a hit, with the September copper contract down 1.41%, as the China economic story dominates yet again, This time it is concerns that Chinese demand for copper is in decline due to slower economic growth this year.

Fed minutes to shed light on policy

Later this week the Federal Reserve will release the minutes of its meeting on 12-13 June which will provide some insights into why the Fed chose to raise US rates by 0.25%. 

The market is expecting four hikes total this year and will be watching for more evidence that the Fed is still on course for this.

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