Sino US trade talks weigh on markets

The Sino-US trade dispute continues to sap the energy out of the markets causing a dip in Asia overnight and the FTSE this morning.

The latest hit came as a round of trade talks between US and Chinese negotiators failed to yield any results.

In Frankfurt the focus shifted away from the talks and onto better-than-expected German GDP data which boosted the DAX on opening by 0.47%. The German economy expanded 0.5% in the second quarter and 2.3% on the year as household spending slowed in the quarter while government spending picked up; both exports and imports rose.

Euro firms, Australian dollar rallies the most

The slightly unexpected German numbers helped the euro firm against the dollar and the pound but the real star of the currency market was the Australian dollar which rallied as the country instated a conservative lawmaker as the new prime minister. The country has been embroiled in political uncertainty since the previous prime minister was ousted and the currency dropped 2% during August alone.

The greenback was static with traders holding back until a key speech by Federal Reserve Chairman Jerome Powell later today. Powell will meet fellow Federal Reserve bankers at the annual Jackson Hole central bankers’ retreat. European Central Bank President Mario Draghi and the Bank of Japan’s Haruhiko Kuroda who were on the invite list will not be attending the summit. The key focus of the event will be Powell’s speech on monetary policy in a changing economy which is expected to provide clues to the Fed’s plans on a further interest rate rise in September.

Oil prices spike

Brent crude is trading up 0.87% this morning following a 3% spike yesterday triggered by US inventory data that showed a decline in domestic oil reserves. However, the US Department of Energy inventory report which caused the spike has been showing wild fluctuations this summer and may not be a reliable measure of the state of the market. What it did show is that there have been fewer imports into the US and this might have caused a decline in stocks.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (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.