Global Equities Creep Higher As Conflicting Messages Cause Trade War Fears To Ease

The FTSE attempted a rebound on Tuesday, clawing back lost ground after global trade war fears pulled the index 2% lower in the previous session. 

Whilst trade war concerns will remain a central focus to trading today, risk sentiment has eased slightly with negativity not quite so dominant as yesterday.

Comments from Trump’s top trade advisor Peter Navarro that the administration is not preparing any trade war measures has gone some way to improving the mood in the markets. 

Whilst this isn’t the first time that conflicting messages have come out of the White House, the markets are going along with it with it for now, pushing US equity indices and the US dollar higher in recovery mode. The stronger dollar in addition to an easing of risk has taken the shine off gold, which declined to a six-month low.

Weaker pound supports FTSE

A stronger dollar and more dovish inclinations on the BoE MPC sent the pound lower on Tuesday. With known hawk Ian McCafferty set to leave the BoE/MPC after August, pound traders as good as ignored his comments pushing for another rate rise, instead panicking after a dovish testimony from new BoE policy maker Jonathan Haskel. 

The last thing that pound bulls are after right now is another dovish policy maker. Jonathan Haskel will firmly push the balance back towards the dominant doves, meaning that if there is no rate rise in August, the opportunity could be lost for quite some time.

The pound is currently trading 0.3% lower, finding support at $1.3230 with further pressure likely to see the pair test $1.32.

Sainsbury & Tesco lower on disappointing industry report

Shares in Sainsbury traded lower across the session, as traders digested the closely followed Kantor report. Not only was Sainsbury the only supermarket of the big four to report a decline in sales but the supermarket also reported a loss in market share. 

This double whammy of disappointment for Sainsbury underpins its need for the tie up with Asda, which itself put it an encouragingly solid performance across the same period. 

Whilst the two supermarket giants may have problems pushing this tie up through the CMA, the need as far as Sainsbury is concerned is in plain sight. Without this deal with Asda, the future of Sainsbury is looking shakier than its rivals.

Tesco was also taking a hit from investors after the same report showed that it market share dipped from 27.9% to 27.7%.