FTSE undecided on direction as main crises simmer down

The FTSE is trading close to flat as concerns over the China-US trade dispute and the state of the Turkish lira remain.

On the Sino-US front, delegations from the two countries are due to meet in Washington next week to try and find a negotiated solution to the conflict over their trade imbalance but the markets are relatively cautious about the outcome. Given what is at stake - and given that the two countries were engaged in similar talks several times over the last few months - the likelihood of a positive outcome seems relatively small.  

The conflict could soon become uglier as the US is considering bringing in sanctions on any country that imports Iranian oil after a deadline in November. China is the world largest importer of crude oil from Iran and has already openly stated that it has no intention of complying with US restrictions. How this conflict plays out remains to be seen.

Slide in US mortgage rates causes concerns 

Although the US stock futures are trading higher this morning a cold wind is beginning to blow from the US. Long term US mortgage rates started to slide triggering speculation that this is the first sign of the US economy overheating. Housing prices and mortgage rates have etched themselves in the minds of traders because they were the first domino in the 2008 financial crisis.  

Although the current slowdown in mortgage rate increases is very small and not really indicative of a declining market it will be very closely watched for signs of a broader trend in the US economy. 

Turkish lira still steady but the market keeps testing 

The embattled Turkish lira, the cause of much of the markets’ declines this week, is trading marginally higher, up 0.03%, helped by the fact that Qatar has pledged to give Turkey a $15 billion loan. The currency is not out of the woods yet and sellers are pushing to see at which level it will hold.

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