Tuesday’s losses were eased, if not erased, by a better than initially expected US open, suggesting Brexit and Italy as the session’s more pressing issues, rather than Trump’s claim that it’s ‘too early’ for trade talks with China.
The Dow Jones eventually started the day flat at 26660; normally nothing to write home about, but here notable for being a huge improvement on the 100 points drop suggested by the futures. This also comes despite the dollar levelling up against both the pound and the euro, leaving the greenback at 3 and 6 week highs respectively.
For sterling the problem is, to the surprise of no-one, Brexit. Uncertainty surrounding Britain’s EU divorce led the construction sector to grow at its slowest pace for 6 months, contributing to the currency’s decline in the process, while the pound is also jittery ahead of Theresa May’s Tory Party conference speech on Wednesday morning. What tone the Prime Ministers strikes in regards to Brexit could well dictate sterling’s performance across the rest of the week, hence the pre-game nerves on Tuesday.
The FTSE, which is normally a fan of a pummelled pound, found little to celebrate as the day went on, slipping 30 or so points to hit 7470. This despite a decent rebound from its miners, and the (admittedly slim) gains made by BP (LON:BP) and Shell (LON:RDSa) as Brent Crude lurked around $85 per barrel.
Over in the eurozone, the conflict between the EU and Italy has not only dragged the euro lower, but caused the region’s indices to reverse Monday’s growth. The DAX dropped 80 points to fall back under 12300, while the CAC was sent to 5450 as it shed 0.9%.
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