Spreadex Market Update

Like clockwork Trump’s weekend trade threats send FTSE and co. tumbling



As has become the pattern of late, the markets sank on Monday morning following the latest weekend tariff talk from Donald Trump, presumably to leave investors scrabbling about for any signs of trade war-avoidance across the rest of the week. Rinse and repeat.

The one major change was that Trump kicked off July by targeting the EU, not China, saying that the region was ‘possibly as bad’ as Beijing in how it treats the US, ‘just smaller’. This has sent the President’s previous threat of tariffs on EU car imports back to the top of investors’ ‘To Fear’ lists, with the added spice of a report from the Financial Times suggesting the European Union could respond in kind with tariffs of $300 billion on US products.

So, the month has started in a troubled mood, with the European indices taking a deep dive into the red. The FTSE fell 110 points, tumbling back towards 7550, thankfully avoiding the sub-7500 nadir struck this time last week. The Eurozone indices were, of course, just as bloody – in fact it’s a surprise they weren’t even more startled – with the DAX and CAC plunging 1.4% and 1.6% respectively. The Dow Jones, for what it’s worth, is facing a 200 point decline this afternoon, though there’s a way to go before those futures become the present.

There was less movement in the forex markets. The dollar chipped away at the meagre recovery attempted by the pound and the euro at the end of last week, taking 0.2% off the former and 0.3% off the latter, while itself dipping 0.2% against the yen.

Given it’s the start of a new month, investors do have June’s manufacturing PMIs to look forward to, with the UK reading set to fall from 54.4 to 54.1, and the Eurozone-wide figure to remain at 55.0. It remains to be seen, however, how much attention the markets will be willing to pay anything that isn’t trade war-related.

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