Equity markets are under pressure this morning as traders continue to be spooked by the prospect of a trade war. President Trump is keen to level the playing field in terms of trade with China, and there is speculation the US will impose tariffs on Chinse imports in a bid to make US goods more attractive at home. Investors remain on edge about the potential political and economic impact of such a possible trade war, and while they do so, they are likely to avoid stocks.
Barclays' (LON:BARC) shares are up 4.2% after Sherborne Investors acquired a 5.16% stake in the company. The investment firm describes itself as a turnaround company, and has a track record of reshaping companies it builds stakes in. The fact that an investment company is interested in the bank has buoyed investor sentiment, and Barclays’ share price is at an 11-month high on the back of the news.
Shares in Micro Focus (LON:MCRO) crashed after the company issued another profit warning and stated that CEO, Chris Hsu, will be stepping down with immediate effect. Stephen Murdoch, the COO, will be replacing Mr Hsu. The company stated that revenue would decline between 6% and 9%, compared with the previous guidance for a drop of between 2% and 4%.
The US dollar index is largely unchanged this morning as we could be in for a day of low volatility, with no major economic announcements from the UK, US or eurozone. EUR/USD is largely unchanged on the day, and the slight cooling of Italian industrial output had little impact on the euro. In January, the Italian industrial sector expanded by 4%, down from a growth rate of 4.9% in the previous report.
We are expecting the Dow Jones to open down 141 points at 24,805 and we are calling the S&P 500 down 15 points at 2737.
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