FTSE undecided on direction as main crises simmer down
Fiona Cincotta August 17, 2018 9:43 AM
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.
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.