FTSE trades higher despite trade and political tensions

Having started the day with its head barely above water the FTSE performed a U-turn and rallied nearly 0.67% during the afternoon trading, continuing to track US markets higher throughout the day and benefiting from a renewed weakening of the pound.

US stocks are mixed with the Dow Jones Industrial Average trading up by 0.37%, but the Nasdaq is in negative territory ahead of the launch of the latest iPhone. 

The iPhone event captured most of the market’s attention Wednesday but a leak from Apple’s website, before the actual launch, caused shares of the tech giant to decline 1.71%. However, the decline should be kept in perspective – so far this year the share has risen by more than 30%.

US markets seem to have mostly shrugged off growing trade tensions between the US and its large trade partners - even as China has asked the World Trade Organisation to introduce sanctions worth $7 billion on the country. 

Instead, US companies are benefiting from strong economic data this week and positive companies’ quarterly reports.

Hurricane Florence boosts oil prices

Oil prices have already been moving higher this week because of renewed concerns over how the latest set of sanctions on Iran would affect the supplies from the country.  Now Hurricane Florence, which is about to hit the East Coast of the US, is taking the lead on pushing prices higher.

Despite the charming name, this powerful hurricane has the less-than-charming capacity to disrupt the flow of oil though the Colonial Pipeline, which transports petrol and diesel from the Gulf Coast refineries to the North East of the US. 

West Texas Intermediate is trading up 2.32% and Brent Crude is trailing in its wake, up 1.02%. But once the hurricane clears, the broader picture in the oil market will change, particularly as OPEC now expects the growing global trade tensions and issues in emerging markets to start affecting world oil demand next year. 

The oil cartel has lowered its demand forecast for next year, by 20,000 barrels a day, to 1.41 million bpd and at the same time said it expects supply from non-OPEC countries to increase by 20,000 bpd to 2.15 million.

Pound heads lower again

The pound had a turbulent day of trading. Theresa May could shortly be facing a challenge to her leadership after 50 MPs started discussing potentially calling a vote of no-confidence in the Prime Minister during the Conservative Party conference in a few weeks. 

With the government deeply divided over Brexit the pound is struggling with any kind of rally. 

Tomorrow the Bank of England’s Monetary Policy Committee will hold its rate setting meeting but given what is happening on the political scene it is expected to keep rates unchanged; despite the fact that inflationary pressures are rising and UK inflation is now 75 basis points above the government’s long term target.