US markets plumb the depths

A sea of red sees the FTSE 100 down over 200 points, while in the US another 600 points has been wiped off the Dow Jones. 

• Selloff gathers pace, pushing Europe to 2-year lows
• China/US situation likely to get worse
• OPEC still to come up with an answer on output cuts 

European markets seem set to finish the day at the lows of the session, while in the US attempts to create a rally have been fruitless.  In what must rank as one of the worst-timed economic releases in recent months, the US trade deficit has hit its widest level in ten years; such news is unlikely to please the White House, so investors will be on watch for a tweet on the subject in due course. Also in the news was a rise in the ISM non-manufacturing PMI, following on from the manufacturing one earlier in the week. With both of these so strong there seems little reason for the Fed to ease off, so markets face the prospect of further deterioration combined with tighter monetary policy. So
 far there has been no response from China over the Huawei arrest, but this should be forthcoming, and will likely inflame the situation further. European markets continue to press further into multi-year low territory, completing a round trip that began after the US election; but with the US under pressure, it looks like it is too early to go bargain hunting in the FTSE and others. 

OPEC seems to be joining in the ‘no deal’ fun, with only an agreement ‘in principle’ to cut output. While oil is off the lows of the day, it is not likely to hold these lows for long if oil ministers don’t agree a sizeable cut. We wait until tomorrow for further news.