US courtroom drama spills over into European market
Fiona Cincotta August 22, 2018 9:37 AM
Two court cases involving close associates of US President Donald Trump resolved last night, injecting fresh uncertainty into the US markets and spilling over into Europe.
After opening a notch higher the FTSE is now heading lower taking its cue from falling US stock futures.
In the first case President Trump's former lawyer Michael Cohen has pleaded guilty in a New York court for violating campaign finance laws and said he did it at the President’s direction. Although Cohen’s comment implicates Trump the President is unlikely to face criminal charges as long as he remains in his current position.
Issues became even more complicated when Trump’s former campaign chairman Paul Manafort was found guilty on eight charges including tax fraud, bank fraud and failing to disclose foreign bank accounts.
Sterling still rallies but at a slower pace
The pound’s big rally Tuesday of over 0.6% seems to be in the rear view mirror this morning as sterling trades flat against the dollar and up 0.15% against the common currency.
Sterling’s short lived recovery was prompted by the report of the biggest government surplus in 18 years and although the market is sobering up this morning the sizeable surplus will provide a cushion for the financial blows which are likely to be created by Brexit.
US-China trade talks start
In amidst the political mayhem that is whipping up around Trump the markets mostly ignored a piece of good news which would have been welcomed on a quieter day. US and Chinese officials are due to start trade talks Wednesday, picking up where they left off last time when trade talks broke down.
The issues involving the large surplus of Chinese exports to the US remain the crux of the discussions with the US using higher and higher tariffs as its main negotiating tool. The talks are a precursor to a high level meeting between President Trump and his Chinese counterpart later this year.