The FTSE is a fraction higher this morning but the index is really struggling to remain in positive territory with the weaker pound working in favour of large export-orientated industrials but expectations of 0% UK growth this year are dampening sentiment.
The lingering trade dispute between US and China and the fresh flare up in the Middle East are not helping overall sentiment in London and are only being balanced out by rallies from miners and equipment rental firm Ashtead (LON:AHT) which raised dividends and announced a major buyback programme.
Pound and the UK economy flat lining in sync
The pound is almost flat-lining after it dipped to 1.2522 against the dollar overnight. The confidence in the currency is gradually being eroded by the limbo at the top of the Conservative party and signs that the economy continues to slow.
The British Chamber of Commerce has confirmed investors’ fears, saying it expects the UK economy to grind to a halt as firms are putting resources into contingency plans rather than investing.
The support from the temporary pre-Brexit stockpiling has also ceased leading to expectations of 0% growth in the second quarter. This follows on a barely present 0.5% increase in the first quarter of the year but could potentially become even worse if there is a disorderly Brexit, the BCC warned.
The dollar is also weakening this morning, having already sloped down late Monday, with weak US manufacturing data sapping the energy out of the currency ahead of the FOMC meeting Wednesday.
Oil lower despite building tensions between Iran and US
For the moment oil prices are on the slide but given the powder keg that is the Middle East this may not last long. Following the two tanker attacks in the Strait of Hormuz last week the US President is sending an additional 1,000 troops into the region arguing that this is for the safety of US personnel on the ground.
Tensions are building on both sides of the US-Iran fence with the Middle Eastern country saying that it will soon breach parts of the nuclear agreement abandoned by the US. Brent crude is down 0.5% but the high tension level will slow down any further decline.
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