FTSE falls back despite CPI fuelled GBP decline

Weak UK CPI and eurozone PMI surveys have dragged the likes of the FTSE and DAX lower, and with Trump continuing to drive uncertainty over global trade, we are seeing anxiety push stocks lower once more.

• Mining and energy firms weigh on FTSE

• Eurozone PMI surveys see GDP at one-and-a-half year low

• UK inflation tumbles, lowering rate hike expectations once more

• Trump continues to ensure volatility remains elevated

European markets are following their Asian counterparts lower, as a pessimistic tone from Trump is compounded by downbeat economic data throughout the morning. The biggest drag on the FTSE 100 is understandably associated with the continued potential for a trade war, with mining firms such as Anglo American, Antofagasta and Glencore being joined by Royal Dutch Shell amid speculation that OPEC could ease their supply restrictions given elevated prices.

A whole raft of eurozone PMI surveys have continued to shed a worrying picture of economic progress within the region. With the rate of expansion in both manufacturing and services sectors falling back to levels not seen since the start of 2017, we are now looking at a growth rate that is the lowest in one-and-a-half years.

UK inflation has dragged the pound to a near five-month low against the dollar in early trade, as a continued decline in both headline and core CPI shifts BoE rate hike expectations further into the future. One worry here is that we are seeing a decline in inflation despite rising oil prices, meaning that there is a distinct possibility that another decline in crude would drag us back into sharp disinflation.

Donald Trump continues to throw curve balls for a market which is hanging on his every word on US-China relations. The promise from China to lower automobiles tariffs had been expected to bring significant influence with Trump. However, while the Chinese gesture put the trade war ‘on hold’, there still further de-escalation needed before markets can truly rule out a trade war.

Ahead of the open we expect the Dow Jones to open 172 points lower, at 24,662.