Markets continue to fall, as markets react to weak Chinese data and continued fears over the US-China trade war. Meanwhile, yesterday’s attack on the Strait of Hormuz rumbles on as the US and Iran trade barbs.

  • Stocks ease lower, as US-Iran trade barbs after yesterday’s attack

  • Sterling declines at prospect of Johnson leading us into final negotiations

  • Chinese data highlights continued slowdown, with eyes turning to G20 meeting

Stocks are in the red once more today, as the wider risk-off move continues to maintain prominence amid a war of words between the US and Iran in the wake of yesterday’s attack in the Strait of Hormuz. The shift into markets with perceived haven status has seen a sharp increase in the price of gold, with the outperformance of Fresnillo on the FTSE 100 highlighting that desire for safety. Meanwhile, markets are growing increasingly fearful over the direction of travel for Brexit, with the prospect of Boris Johnson leading us into the critical phase of negotiations driving sterling back into the lows of the week.

Despite the head-turning events in the Middle East, the relationship between China and the US remains the key determinant of market movement given its knock-on effect on global trade and growth. Declining fixed asset investment and industrial production out of China this morning highlights the continued weakness that will continue to drag growth lower. The one bright spot came from the retail sales figure, which highlights a clear growth in domestic demand in the face of falling international business. While it may seem that there is no end in sight for this US-China spat, the G20 meeting between Trump and Xi Jinping could be the spark that reignites the trade negotiations once again.

Ahead of the open we expect the Dow Jones to open 42 points lower, at 26,065.

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