European markets are nudging lower ahead of the key meeting between the US and Chinese presidents at the G20 this weekend as investors are not putting much hope on successful resolution of the trade dispute.
In London supermarket shares are under pressure after research agency Kantar released the latest six-week sales numbers from UK grocers showing that sales growth even at Tesco (LON:TSCO), which is the most tightly run supermarket of the big UK four, came to a standstill, while sales at the others declined between 0.1 and 0.6%.
As usual the weather was blamed for most of the decline as the lack of sunshine hampered sales of picnic foods and drinks. By extension home improvement shares were also lower on the assumption that the wet summer affected sales of gardening materials and paints.
Pound stronger but path ahead looks rocky
The pound is a touch stronger against the dollar and the euro in the relative absence of market-moving news from the Tory leadership contenders. However, the options markets are starting to price in a bigger decline against the euro over the coming months with the cost of put options , or sell options, reaching the highest level in 2 months. The main worry for the currency is that if the Bank of England really goes ahead and increases interest rates sooner rather than later - as it has recently indicated -while it will go some way to counterbalance rising inflation and wage growth, it will also hit the economy which is already teetering closer and closer to recession.
Gulf tensions and cut expectations are propping up oil
Tensions in the Gulf are continuing to ratchet up bit by bit, the latest being President Trump's new sanctions against Iran’s top officials and the country’s supreme leader. Oil prices are 0.14% lower this morning as investors took some profits off the table, but overall the price is holding at a higher level than before the tanker attacks in the Strait of Hormuz.
This combined with OPEC signalling that it is likely to extend its existing output cuts when it meets in Vienna later this month will keep oil prices propped up.
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