Joshua Mahony MSTA
Scope Markets
Donald Trump has poured cold water on hopes of a near-term US-China trade resolution, with the rally in European indices halting as a result. Meanwhile, UK CPI remains flat in rare sign of economic stability.
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European rally halts as EUR and GBP selloff takes a breather
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Trump comments stifle any bullish sentiment
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UK inflation flat, yet London house prices drop 4.4%
European markets are taking a somewhat more downbeat tone today, as the sharp deterioration in European currencies that boosted local equity markets slows to a halt. Donald Trump has also had a hand in this stock slowdown, with the President stating that US-China trade talks still have ‘a long way to go’. There are precious few signs that any progress is being made, and thus we have seen the focus shift onto the Fed (last week) and now earnings. With a host of US banks in the spotlight this week, the headline profitability has been somewhat overshadowed by falling net interest margins which will only get worse when the Fed stat cutting rates.
This morning’s UK CPI reading was expected to provide another bout of volatility for the pound and FTSE, yet we instead saw a rare period of stability for UK data after CPI remained at 2%. The declines seen throughout recent UK data point towards a shift in business and consumer behaviour as we head towards the October deadline. Today has seen house prices highlight the same pattern, with ONS data showing a massive 4.4% fall in London house prices as international investors hold off until there is greater clarity on Brexit.
Ahead of the open we expect the Dow Jones to open 30 points higher, at 27,366.
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