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FTSE almost flat as new trade tariffs kick in

Article By: ,  Senior Market Analyst
August 23, 2018 7:12 AM
FTSE almost flat as new trade tariffs kick in 

The FTSE is trading very close to the flat line after the Asian markets closed lower amid increased trade hostility between China and the US. 

Both countries put their previous plans into action, implementing a 25% tariff on imports of $16 billion worth of each other’s goods, adding to already existing punitive tariffs - with more tariffs to come. 

This week, delegations from the two countries start preliminary talks in an attempt to iron out their trade differences, but President Trump has already said that his expectations of a positive outcome are low. This comment, effectively annulling any supportive effect the talks may have had on the market.


German services and manufacturing going strong in August

The euro is holding steady against the pound, up 0.02%, but has declined against the dollar by 0.20% - after Germany reported a marginal decline in the Purchasing Managers Index for manufacturing in August. 

Nevertheless, the PMI came in at 56.1 – any number above 50 indicates growth – showing that the country’s manufacturing is still in strong shape and assuaging fears that a slowdown in the global economy is affecting the Eurozone’s biggest member. 

Germany’s services PMI also rose boosting the composite index to the highest level in six months.


US housing market on the cusp of change

In some US cities house prices have been moving at a shockingly high pace, particularly trendy conurbations such as San Francisco and Seattle. This has helped notch up rises in the lower double digits. 

But data out today shows that the Fed’s persistent interest rate hikes this year have had an impact and have managed to reign in that rise. In two thirds of the country the speed of price increases has finally slowed, particularly in Florida, California and Portland. House sales growth has declined to a monthly 0.7% rate. 

These numbers will keep US central bankers happy as they gather in Jackson Hole for a day of talks. The Fed has finally managed to coral inflation into a narrow band around its 2% target while at the same time maintaining a good pace of growth in the US economy


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