The FTSE and European markets are surprisingly positive this morning despite the start of the increased tariff regime on Chinese imports into the US Friday and even though the ongoing trade talks due to continue in Washington on Friday have not yet reached a conclusion.
The tariff battle front could expand to include Europe and Japan from next week when President Trump is due to decide on whether or not to increase the tax on European and Japanese car imports.
The DAX will be particularly sensitive to the US news given that German car and car part makers are a significant component of the index.
So far the FTSE has managed to avoid the trade-induced malaise mainly thanks to results from British Airways parent firm IAG which rallied 3.58% in early trade. Most of the Asian markets slipped overnight while US stock futures are in the red this morning.
Euro higher as German manufacturing surprises
The euro is notching higher against the pound and is more or less holding flat against the dollar after German manufacturing surprised on the upside with a slight expansion in March. This will be good news for the ECB particularly after the European Commission reduced the growth forecast for the German economy this year to only 0.5%.
The pound is sliding into negative territory against the euro and the dollar despite a surprise pick up in the UK’s first quarter GDP caused by a flurry of orders being delivered ahead of the planned Brexit March deadline.
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