Tariff war and domestic politics weigh on the FTSE
Oil higher as Saudi steps in to support prices
Saudi Arabia stepped into the breach to support higher oil prices with the country’s officials claiming that they were comfortable with oil being traded above $80.
Traders are still trying to assess how much the Iran sanctions, due to come into effect in November, will disrupt the flow of oil into the West, but if Saudi Arabia is comfortable with higher prices it means that the country is unlikely to increase production immediately in order to balance out declining supplies.
The US has been lobbying hard with Saudi Arabia and Russia to make sure that the world’s two largest oil producers continue pumping enough oil for prices to not rise too much.
Before the London close Brent crude traded up 1% and WTI up 1.15%.
First concession in the Sino-US trade dispute
US stock markets seem unperturbed by the rambling trade dispute between the US and China and indices are up across the board. The Dow Jones Industrial Average traded up 0.4% while the Nasdaq rose 0.92% although the tech-heavy index has the potential to be the hardest hit if China and the US escalate their trade dispute onto the next level.
President Trump has already threatened to introduce tariffs on all the remaining imports from China which are not yet included if China responds to this week’s tariffs, which it has already done. If the trade war goes all out it would start affecting the big US tech stocks. Apple is particularly vulnerable as half of its iPhones are produced at a plant in central China.
The two sides each made their first concession in the current trade conflict, the US by lowering its initially planned 25% tariff to 10% and China responding in kind, notably on US imports of liquid natural gas. Both sets of tariffs will start applying from 24 September.
UK economic indicators on Wednesday
The pound is gently slipping against the dollar and the euro ahead of several key UK economic indicators due to be released on Wednesday.
The UK house price index and the consumer and producer price indices will be published at 9.30 tomorrow and will provide an indication over whether the Bank of England needs to start worrying more about inflation or about the effect of Brexit.
The latest batch of house price data was showing a decline in volumes of sales and in London house prices, although the rest of the UK was mainly holding up. At present domestic inflation is at around 2.5%, slightly above the government’s long term target of 2%.
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
City Index is a trading name of StoneX Financial Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.
While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.
StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.
It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.
StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.
© City Index 2024