With the latest bout of US-China trade war optimism petering out already – after all, a deadline-delay isn’t the same as a signed deal (something sterling should perhaps keep in mind) – and the pound getting a Brexit boost, the FTSE foundered its way through Tuesday’s open.
Though nothing has changed since Donald Trump heralded the progress made between the two superpowers, that seems to be the exact problem, investors rightly impatient to get more details about what any agreement will involve, and when it can be expected. This lack of substantial update caused the Dow Jones to lose enthusiasm by Monday’s close, and forced the Asian indices to beat a retreat overnight.
Feeding into the European markets, the DAX and CAC found themselves down half a percent apiece, the former slipping towards 11450, the latter barely clinging on above 5200.
Worst hit was the FTSE, which tumbled 1% to lurk a handful of points above 7100. That’s because the UK index wasn’t just dealing with the trade tensions, but also the pound’s latest hopeful rise. Reports suggest key cabinet members, including Amber Rudd, could resign if Theresa May doesn’t take no-deal off the table, something that would necessitate a delay to Brexit.
Combine that with Labour announcing they will back a second referendum if – more likely when – their own version of Brexit fails to get through the Commons, and sterling was feeling feisty. Cable rose 0.4% to strike $1.315, while against the euro, the pound was up 0.5% and at €1.159, both prices being effectively one-month highs for the currency.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.