Markets are digesting new details on the U.S.-China trade dispute. The U.S. trade representative’s office published a specific list of Chinese imports that could be hit by tariffs. China’s U.S. embassy has indicated it is will respond in kind, perhaps in equal measure. Reignited fear of a trade war is handicapping the nascent recovery that had started on Tuesday.
Wall Street had finished strongly on Tuesday but the escalated trade tensions indicate the positive spill over into Europe will be limited. Traders have been tempted back into usually high-flying technology stocks at bargain price levels. Lack of confidence in the near term direction for tech sector should limit the market’s upside potential. Amazon (NASDAQ:AMZN) is yet to respond to allegations by US President Trump that it operates in ‘not a level playing field’ because of low taxes and deal it has with the Postal Service. Facebook’s Mark Zuckerberg still needs to testify to lawmakers over his firm's data scandal.
On Wednesday, eurozone inflation stats will reveal whether there has been any pickup in prices during March after a multi-month slowdown. Expectations are for EZ CPI to grow 1.4% in March, up from 1.1% in February, while core prices should mo e to 1.1% from 1.0% previously. Inflation really needs to be at least within spitting distance of the 2% target for the ECB to justify tightening policy.
Later on, US ADP payrolls data will give the first snapshot of the US labour market in March, but Friday’s wage growth stats remain the key focus for markets and their expectation for inflation.
Opening calls
FTSE to open 2 points lower at 7028
DAX to open 28 points higher at 12,030
CAC to open 6 points higher at 5158
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