After attempting a rebound last Friday, the European markets started the week in the red, a trade war-led drop in German factory orders spooking investors.
Plunging 4% in June – the sharpest decline for nearly 18 months – the German factory orders set the tone for the day, with the DAX falling more than half a percent following the release. This effectively wiped out whatever mild growth the index had managed at the tail end of last week, forcing the German bourse back towards 12550.
The FTSE wasn’t quite as bad as the DAX on Monday, the index remaining in the familiar surroundings of its 7650-7700 trading bracket as it dipped 0.1%. It arguably only avoided a larger loss, however, due to the latest blow dealt to the pound.
Following on from Mary Carney’s warning last Friday that the risk of a no-deal Brexit was ‘uncomfortably high’, international trade secretary Liam Fox stated over the weekend that the chance of the UK leaving the EU without an agreement in place is now ‘greater’ due to the ‘intransigence’ of the European Commission. Obviously sterling, which is having a really sour summer, wasn’t best pleased with this update, slipping 0.2% against the dollar to fall under $1.298, keeping cable near 11 month lows.
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