There was a lot of different factors at play on Tuesday, and none of them particularly positive, leading to a sharp reversal of Monday’s gains.
Spare a thought for the poor FTSE. While its peers spent the session undoing the growth they had posted at the start of the week, the fact the UK index failed to join in with Monday’s USMCA-celebrations meant Tuesday’s losses were even more painful. The FTSE dropped another 50 points to hit 7450, despite Brent Crude trading between $84.50 and $85 per barrel, the wider negativity and another 10% plunge from a seriously troubled Royal Mail (LON:RMG) preventing the index from enjoying the black stuff’s overnight gush.
Normally when the FTSE is in such a state the pound tends to be in the green. Not so on Tuesday, with an unexpected, Brexit-concerned drop in September’s construction PMI helping to drag the currency lower. Against the dollar it shed 0.6%, with cable tumbling to a 3 week low, while against the euro it dipped 0.1%.
As for the Eurozone, the war of words between the EU and Italy – the latter’s Deputy Prime Minister accused Pierre Moscovici of deliberately ‘upsetting the markets’, League lawmaker Claudio Borghi said the country would be better outside the euro, and Claude Juncker evoked the Greek crisis when discussing last week’s Italian budget – left the region’s indices in a miserable state. The DAX returned to 12250 as it fell just shy of 100 points, with the CAC dropping 1% to hit 5450. The euro, meanwhile, slipped half a percent against the greenback, leaving it at a sub-$1.152, 6 week nadir.
Anyone hoping for a US-led turnaround looks like they’re going to be left wanting. The Dow Jones is set to fall 100 points when the bell rings on Wall Street, sending the index back to 26560 having teased a fresh all-time high during Monday’s excitement. That’s because the hopes the relatively peaceful resolution to disputes with Canada and Mexico could set the template for a similar situation with China were dashed by Trump claiming it was ‘too early’ for trade talks with Beijing.
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