Worst week of the year for stocks

The FTSE had a rather dreary end the week, dropping into the red by midday and dragged lower by weakness on Wall Street.

The FTSE had a rather dreary end the week, dropping into the red by midday and dragged lower by weakness on Wall Street. With little in the way of corporate earnings or high impacting economic data to distract traders, trade war fears & global growth concerns dominated, hitting sentiment. Whilst the FTSE was in line to book a 0.9% rise across the week, this was only thanks to a steep devaluation of sterling on Tuesday. Bourses across Europe and on Wall Street were heading towards their first weekly loss in around 2 months.

News that Trump was not planning on meeting with China’s President Xi Jinping before the March 1st trade truce deadline has unnerved investors. The market’s recent rally has been largely down to an optimistic view adopted by traders that progress was being made in US – Sino trade talks. However, no deal will be finalised without the two leaders meeting. So, this latest report has thrown cold water over trade deal optimism, with an escalation in trade tensions almost inevitable come March.

Risk off boosts gold
Risk off sentiment has seen traders move out of equities and increase flows into safe havens. Gold is a notable winner, up 0.3% across the session as it once again looks to attack resistance around the $1319/20 level. More negative trade or growth headlines could help see gold move back towards $1350, sooner rather than later, a level last seen in March.

Oil steady after Thursday’s 2% decline
Whilst housebuilders were dominating the upper reaches of the FTSE, oil majors shifted lower. Oil dropping over 2% in the previous session and hovering around the flatline today is hitting demand for the likes of BP and Shell. Whilst US sanctions on Venezuela and OPEC cuts are offering a floor to the price of oil, the overriding fear is that slowing global growth will hit demand.

Pound treads water
The pound was treading water as we move to the end of the week. With little progress on Brexit, traders are struggling to find any fresh news to sink their teeth into. Theresa May left Brussels empty handed, but that was hardly a surprise. The PM and hr cabinet will now meet with leaders across Europe in the hope of convincing them to soften their stance. Whilst the situation is certainly starting to look a little more desperate, the pound is not pricing in a no deal Brexit at these levels.

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