The massive 800 point drop of the DJIA since the start of this quarter has spilled over into Asian and European trading this morning but the FTSE is proving relatively resilient, sliding only 0.28% despite rising panic emanating from the US markets. The Dow’s decline was triggered by weaker US data, particularly job creation and manufacturing figures, which the markets quickly assigned to the Sino-US trade war although it has more to do with an overall slowdown of the global economy and the petering out of the effect of domestic tax cuts than just the trade dispute.
A new transatlantic trade front is about to open up after the US won approval from the WTO to start levying tariffs on $7.5 billion worth of European goods over illegal subsidies to Airbus. The long-simmering dispute will add to the existing tariffs on European cars the US already has in place and reciprocal European tariffs. European cheese, wine and whiskey producers are expected to be hit the hardest but the list of goods that will face new tariffs is far longer than that.
The pound blipped lower on opening but quickly regained ground and is trading almost flat against the dollar and the euro as investors try and assess if Boris Johnson’s latest Brexit proposal will get the green light from Brussels. For the moment the Parliamentary Act should shelter the pound from the possibility of a 'no deal' Brexit but the overall instability will not allow for much upside in trading.