- The FTSE 100 closed not far off its day’s lows yesterday, having been under pressure from the open following rising concerns over US-China trade tensions along with increasing evidence that Prime Minister Theresa May is now on borrowed time.
- Oil price came under severe pressure yesterday.
- US stocks ended deeply in the red again yesterday, albeit recouping some of their losses in the final hour of trading.
- Asia is set to close shortly, mixed with mostly just modest moves having after seeing Japan stage a half-hearted rally from its opening lows.
- Today’s UK financial updates include finals from: Mothercare, Urban Logistics, Tiger Resources and Westminster Group, with General Meetings due for Bodycote, Bezant Resources, Fevertree Drinks, Informa, Luceco, Pagegroup, Spectris and the Yew Grove REIT.
SVS expects the FTSE 100 to gain around 20 points in this morning’s opening trade. This follows the US markets ending slightly above the levels being achieved around the time of yesterday’s European close, with futures now trending firmer, while Asia is looking set to end shortly with a mixed close led by the Chinese indices as oil futures suggest opportunity to recover some of Thursdays deep losses. Traders globally, however, are continuing to chant their common theme of concerns that with no new trade talks between the U.S. and China being scheduled, a protracted trade war may ensure with implications for the global economy.
The FTSE 100 closed not far off its day’s lows yesterday, having been under pressure from the open following rising concerns over US-China trade tensions along with increasing evidence that Prime Minister Theresa May is now on borrowed time. The pulling of her Brexit legislation from the Commons schedule, prompts speculation that she is on the verge of quitting, with harder-line Boris Johnson seemingly ready to jump in the hot-seat. Elsewhere, the fact that a spokesman for the Chinese Commerce Ministry stated that the President Trump’s administration must be willing to “show sincerity and correct their wrong actions” should it wish negotiations to recommence was taken as a sign that both sides might be preparing to dig their heels in for a lengthy stand-off. Noting that China is considering its response to the White House’s recent tariff increase, traders have braced themselves for possible retaliatory action from Beijing for what it considers to be blatant ‘bulling’ of Huawei. The FTSE 100 index closed 1.4%, or 103.15 points, off on Thursday, taking the index to at 7,231.04, with ex-dividends contributing some of the pressure and despite continuing Sterling weakness; the FTSE 250 ended the same amount down to end at 19,031.21, while the AIM All-Share slipped 0.9% to 957.54. European markets were similarly troubled, with France’s CAC 40 and Germany’s DAX 30 both finishing down 1.8%. Losses were biggest for automotive, industrial and technology companies who are most immediately exposed to a slowdown in international activity.
Oil price came under severe pressure yesterday. Falling for a second day, the global benchmark, Brent Crude, declined 4.5% to US$67.79/bbl during European trading yesterday. Seemingly ignoring news from the Pentagon that 10,000 American Troops could be sent For Middle East to counter the apparent ‘Iran Threat’, inventory data from the US on Wednesday was the principal culprit, with the wave of concerns regarding global trade and concerns for a sharp economic slowdown were also a major influence. US inventories surged by 4.7 million bbl last week totol of 477 million, their highest since July 2017, suggesting a looming supply glut. Gasoline stockpiles also spiked 3.7 million bbls with distillate also climbing 800,000 bbls. Oil futures are now attempted a modest rebound in this morning’s late Asian trading, suggesting scope for a minor rebound with the European opening.
US stocks ended deeply in the red again yesterday, albeit recouping some of their losses in the final hour of trading. Haven assets such as gold and Treasuries remained in favour, sending the yield on the benchmark 10-year to its lowest since October 2017. In what is being seen as almost ‘tit-for-tat’ game of nerves being played between China and the US, the Commerce Department yesterday stated it is considering expanding the number blacklisted ‘entity’ Chinese companies for US suppliers as China indicated its own preparation for retaliatory tariff/export impositions. Members of Congress are already urging the White House to apply sanction similar to those already applied to Huawei, to names including Dahua Technology and Hangzhou Hikvision Digital Technology, both of which are involved in digital surveillance. The Dow Jones industrial Average fell 286.14 points, or 1.1%, to 25490.47, while the broad S&P 500 lost 1.2% and the Nasdaq Composite dropped 1.6%, as techs were once again sold off. Amazon.com and Facebook both dropped more than 2%, while Microsoft and Apple also lost over 1%. The S&P 500’s industrial sector, a bellwether for international trade, tumbled 1.6%. Reflecting their concerns, a paper published by the Federal Reserve Bank of New York suggests that tariffs on Chinese imports will cost the average US household US$831/year through higher prices and lower economic efficiency.
Asia is set to close shortly, mixed with mostly just modest moves having after seeing Japan stage a half-hearted rally from its opening lows. The Nikkei 225 is presently off -0.45%, recovering from more than a 1% drop shortly after its opening in anticipation of President Trump’s State Visit to the country today. Chinese stocks currently look slightly better, with Hong Kong’s Hang Seng now in the positive, +0.18%, while the Shanghai Composite is modestly down, -0.21%. Elsewhere, South Korea’s Kospi stands -0.85%, Taiwan’s TIAEX +0.27%, Singapore’s STI -0.16% and Indonesia’s JCI +0.35%, with Australia’s S&P/ASX 200 off -0.81%.
Today’s UK financial updates include finals from: Mothercare, Urban Logistics, Tiger Resources and Westminster Group, with General Meetings due for Bodycote, Bezant Resources, Fevertree Drinks, Informa, Luceco, Pagegroup, Spectris and the Yew Grove REIT. With the US’s Q1’2019 earnings announcements continuing, filings scheduled for today include: The Buckle Inc, Foot Locker, Hamilton Thorne, Hibbett Sports, Thermon Group, and WOD Retails Solutions.
