FTSE rebounds as U.S. lowers flames in Huawei tussle

The FTSE index has reversed directions on Tuesday, after losses on Monday. In the North American session, the pair is at 7,325, up 0.21% on the day. On the release front, Mark Carney’s testimony on inflation before a parliamentary committee has been cancelled. British CBI Industrial Order Expectations slipped to -10, weaker than the estimate of -6. This marked the lowest score since November, as manufacturing orders continue to decline.

U.S-China trade tensions continue to trigger volatility in the equity markets. On Friday, the Trump administration had announced it was imposing trade sanctions on the Chinese telecom giant Huawei, a move which sent stock markets reeling on Monday. However, the U.S. Commerce Department has taken a step back, saying that it will provide 3-month exemptions to U.S. companies that sell to Huawei. The tussle over Huawei has exacerbated the trade war between the two economic giants, and risk appetite will remain soft until the sides resume negotiations.

Brexit has not been in the headlines of late, but that could change later in the week, when European Parliament elections take place. The election for the European Parliament could boost anti-Brexit parties, as the Conservatives are expected to make a poor showing. Key issues in the election, which covers all 28 member EU states, include the economic slowdown, the migrant crisis and the rise in Euroskpeticism. Euro-skeptics increased their representation in parliament from 12% to 25% in the last election, and with the dramatic increase in strength of populist parties, this trend could well continue. This could weigh on the British pound, which plunged 2.1% last week, while boosting the FTSE as investors seek alternatives to the wobbly British currency.

Sterling Trades at Five Month Lows on Brexit worries

Dow futures pop 150 points after US eases trade restrictions on Huawei

Economic Calendar

Tuesday (May 21)

  • 4:30 British Inflation Report Hearings – cancelled
  • 6:00 British CBI Industrial Order Expectations. Estimate -6. Actual -10

*All release times are DST

*Key events are in bold

FTSE, Tuesday, May 21 at 10:50 DST

Previous Close: 7,310 Open: 7,336 High: 7,321 Low: 7,370 Close: 7,325

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)