It has not been a good start to the week for the FTSE, caught on the back foot after the US-China trade relations talks started to deteriorate again.
After the last set of US-China trade negotiations in Beijing, comments from both sides were muted about progress but on Monday the US threatened to increase trade tariffs of Chinese again because the Chinese side seems to be backtracking on some of the agreements made during the talks.
The increase from 10% to 20% would affect $200 billion worth of goods and could kick in as soon as this Friday unless the Chinese delegation arriving in Washington on Thursday manages to appease the US negotiators.
The US-China one-step-forward-two-step-back hurt US markets late Monday and extended into Asian and European trading. The DAX initially held up helped by data showing that German manufacturing orders picked up in March but it eventually crumbled because German exporters are highly sensitive to the stability of the Chinese market, one of their top export destinations.
Lira is back on centre stage
The Turkish currency, which has been the centre of attention for all the wrong reasons over the last year, has come back onto investors’ radars with a 3% plunge today triggered by election shenanigans in the country.
The dollar traded up at 6.1976 lira, the highest in seven months after the country’s controversial President Erdogan annulled election results in Istanbul where his party lost.
Sterling nearly flat
Pound traders are still chewing over the results of last week's local elections which have seen a substantial loss of seats for Conservatives and a lesser loss for Labour, with voters opting for politicians untainted by the ineffectual Brexit decision making.
There is currently not much to fill the void of political news flow and sterling is trading with very little volatility and within a narrow range. This is likely to be the calm before the storm which could start playing out before the summer. For the moment though the pound is marginally weaker against the dollar and flat against the euro.
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