Spreadex Market Update

FTSE and co. follow US and Asian collapse as Trump calls Fed rate hike plans ‘crazy’



It was just all too much for the markets this Thursday, an already awful month turning truly alarming following an American and Asian collapse overnight.

The European open was a proper, old-fashioned bloodbath, reminiscent of the drastic sell-off seen back in February. Already on Wednesday investors had been fretting over the IMF’s US-China trade war warnings and the related weakening of the yuan, alongside the unresolved budget battle between the EU and Italy.

An improved, if as expected, US PPI reading then reignited the fears of further interest rate rises from the Federal Reserve, with the straw that broke the camel’s back being Donald Trump’s typically tactless claim that Jerome Powell and his central bank peers had gone ‘crazy’ with its rate hikes. This resulted in a frenzied finish to the US session, with the Dow Jones losing more than 800 points, and subsequent breakdown in Asia, setting the scene for a painful European start on Thursday.

The FTSE dropped more than 100 points, hitting a fresh 6 month low of 7050 in the process (while sporadically threatening to fall to 7000). The DAX also shed 100 points to tumble below 11650, with the CAC down 1.2% to 5150. The forex markets were slightly less excitable. Cable continued to sit at $1.32, its best price in almost 3 weeks, while against the euro the pound pulled back 0.2%, remaining near Wednesday’s 4 month peak.

To make things even spicier, Thursday’s trading is going to build to the latest US inflation reading this afternoon, a figure that could exacerbate or ease the day’s losses dependent on whether or not it rises month-on-month.

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