It was all too much for the markets on Tuesday. The poisonous brewing cauldron of geopolitical and economic issues led to one of those opens as nuance-less as it was red.
The unresolved US-China trade war (and fears about the latter’s economy), the US withdrawal from the INF Treaty, the Khasohoggi-related friction between the West and Saudi Arabia, Brexit (all of it, but specifically the rising chances of a no deal divorce), and, perhaps most pertinent to Tuesday, the ongoing EU-Italy budget dispute. A calamitous cavalcade of market concerns, of such seriousness that it is a surprise the global indices ever manage to edge into the green.
Given that the Italy-EU tensions, with the European Commission likely to ask revise its 2019 budget at some point on Tuesday, it stands to reason that the eurozone indices were the worst hit after the bell. The CAC ducked under 5000 as it fell 1.2%, with the DAX dropping more than 150 points to slip the wrong side of 11400 for the first time since the end of 2016.
As for the FTSE, it was in no way immune to this miserable open. The UK index shed 50 points, enough to force it back below 7000, the bottom end of the narrow trading bracket it has found itself in following the plunge that started October. After struggling on Monday, the pound mounted a very minor comeback, rising 0.2% of against the dollar, just about lifting cable above $1.299, while nudging up 0.1% against the euro.
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