Trade headlines were once again responsible for losses on the Dow and the S&P overnight, whilst the likes of Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) helped to keep the Nasdaq afloat.
Trump announcing that the US will no longer tolerate abuse was another sign that trade tensions really are going nowhere fast. Trump’s America First speech at the UN pulled US indices off their highs and dragged heavily on the likes of GE (NYSE:GE) and Ford (NYSE:F). The speech came just as the US prepares to move ahead with a trade deal with Mexico that excludes Canada. The new rules are that there are no rules. Trump continues to tear up the old regulations demanding nothing less that a level playing field. This is giving the markets a strong feeling that the trade issues will continue over the medium term with trade headlines driving price action.
Asian markets traded positively overnight, despite Trump’s outburst, as China’s Vice Commerce Minister said that China would resume talks if the US showed sincerity. Both sides are digging in their heels, making any progress slow.
Oil eases
Following on from a loss on the Dow and a move higher in Asia, European bourses were pointing to a mixed start, with the FTSE dragging behind its peers. Oil stocks look set to remain in focus as the price of Brent continues to hover over $81 per barrel close to its recent 4 year high. The price eased back overnight as the US promised to keep oil markets well supplied ahead of the US sanctions on Iran.
Fed in focus
The dollar was trading cautiously higher this morning ahead of the Fed’s monetary policy decision, pursuant statement and press conference, which are the highlight of the trading day and week. The Fed are widely expected to hike 25 basis points to 2.25%, in the third hike of the year. Whilst this hike is almost completely priced in and another in December over 76% priced in, investors will be turning their attention to next year.
In June, the Fed indicated 3 hikes across 2019 and these are expected to be carried out one per quarter, for the first three quarters. This leaves traders wondering what the Fed have planned thereafter? A hawkish plan could re-ignite the dollar rally, whilst suggestions of a slow down in the pace of hiking or that the Fed is coming to the end of its cycle next year, could bring the dollar tumbling lower.
Opening calls
FTSE to open 5 points lower at 7502
DAX to open 25 point higher at 12399
CAC to open 4 points higher at 5483