The blue-chip FTSE is showing sharp swings this week. In the North American session, the pair is at 7,239, up 1.11% on the day. On Monday, the FTSE plunged 1.5%. In economic news, the U.K. released key employment numbers. Wage growth slowed to 3.2% in March, down from 3.5% a month earlier. This missed the estimate of 3.4% and was the lowest gain since September. The unemployment rate sparkled in March, dropping to 3.8%. This beat the estimate of 3.9%. Unemployment claims fell to 24.7 thousand in April, down from 28.3 thousand in March. Still, this was above the forecast of 24.2 thousand.
Trade tensions between the U.S. and China continue to rock global equity markets. The blue-chip FTSE index has been hit hard, falling 1.5% last week and falling sharply on Monday. The U.S. and China have exchanged tariffs on each other products, dampening hopes for a trade deal and weighing on risk appetite. Nervous investors have been dumping equities in favor of safe-haven assets, such as the U.S. dollar and the Japanese yen. On Friday, the U.S. raised tariffs on $200 billion in Chinese goods, from 10% to 25%. The move was announced a week ago, triggering sharp declines in the equity markets. The Chinese response was vigorous, with Beijing announcing earlier on Monday that it would slap tariffs on $60 billion of U.S products.
Despite the escalation in the trade war, talks between the U.S and China continue, with officials scheduled to hold the next round of talks in Beijing. The new tariffs do not apply to Chinese goods that left port prior to May 10, affording a 2-week window for negotiators before the tariffs take effect. The escalation in tensions has shelved a meeting between President Trump and Chinese President Xi, but the two leaders could meet at the G-20 summit in Japan in June.
Brexit may have been pushed off until October, but confusion and uncertainty over Britain’s departure from the EU remain. Prime Minister May, stymied by parliament in three attempts to pass a Brexit withdrawal bill, is now trying to reach an agreement with Labor leader Jeremy Corbyn in order to win approval for a withdrawal bill. However, this could prove to be a dead end for the embattled May. Corbyn is insisting on a customs union with the EU, which is anathema to many Conservative lawmakers, who fear such an arrangement will tie the U.K. to the EU for an indefinite period.
Tuesday (May 14)
- 4:30 British Average Earnings Index. Estimate 3.4%. Actual 3.2%
- 4:30 British Unemployment Rate. Estimate 3.9%. Actual 3.8%
- 4:30 British Claimant Count Change. Estimate 24.2K. Actual 24.7K
- 12:45 US FOMC Member George Speaks
Wednesday (May 15)
- 8:30 US Core Retail Sales. Estimate 0.7%
- 8:30 US Retail Sales. Estimate 0.2%
- 8:30 US Empire State Manufacturing Index. Estimate 8.2
*All release times are DST
*Key events are in bold
FTSE, Tuesday, May 14 at 10:10 DST
Previous Close: 7,163 Open: 7,192 High: 7,239 Low: 7,188 Close: 7,236
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