Trade War Relief Rally Boosts FTSE

Following a phenomenal reversal on Wall Street in the previous session, the FTSE has charged higher out of the blocks this morning. 

A trade war relief rally, which saw the Dow rally 700 points from its lowest point into the close and the S&P closed above its 200 day moving average, also helped the FTSE jump 1.4% in early trade.

Wall Street experienced a roller-coaster previous session, which saw the Chinese announce a set of $50 billion tit for tat trade tariff measures, followed by a softening in stance by the White House; the fact that traders are putting risk back on the table suggests they convinced that there is still a good opportunity for both sides to row back, de-escalate and save face before the tariffs are due to be implemented.

Oil & miners rally on easing tensions

The rally on the FTSE has been broad based, with miners featuring heavily on the gainers board as metal prices benefit from the easing of Sino – US tensions. 

Oil stocks were also on the front foot, supported by a rally in the price of the black stuff. Crude jumped 0.3%, buoyed not only by the easing of trade war tensions but also by US government data showing an unexpected drawdown in crude stockpiles.

Euro at 10 day low on weak pmi’s

EUR/USD was softer in early trade following composite pmi data for both the eurozone and Germany, which showed that activity grew more slowly than forecast. Whilst eurozone growth was the big story for 2017, data this year has continually supported concerns that the momentum is slowing. 

Traders will now look towards US initial jobless claims for further clues prior to the non-farm payroll data tomorrow.

EUR/USD is trading at a 10-day low of €1.2265, with the pair looking vulnerable, potentially heading towards $1.22 on strong US data.

Service sector activity slows sharply

The pound has dropped sharply following data showing that the service sector has slowed to a 20-month low. The service sector PMI dropped from 54.7 in February to 51.7 in March, falling well short of expectations in the weakest reading since the Brexit results. 

Just as unusually cold weather negatively impacted on construction activity, service sector activity was disrupted for the same reasons. 

The timing of this unusually cold snap couldn’t be worse, services are already under severe pressure from the squeezed consumer and now the weight of the snow has proved too much. 

With no more high impacting UK data this week, a solid US non-farm payroll report tomorrow could send the pound comfortably back below $1.40.