FTSE rebounds but trade tensions persist

The FTSE has posted gains on Thursday, after two losing sessions. Currently, the FTSE index is trading at 7,221, up 0.50% on the day. In the U.S., Preliminary GDP came in at 3.1%, matching the forecast. In the U.K., GfK Consumer Sentiment is expected to remain deep in negative territory, with an estimate of -12 points.

The Bank of England is anticipating soft economic growth for the U.K. Earlier in May, the bank’s projected growth of 1.5% in 2019 and 1.6% in 2020, and that is on the assumption that the Brexit process goes smoothly. On Thursday, Deputy Governor Dave Ramsden took issue with his MPC colleagues, saying that he is more pessimistic about the economic outlook and believes that growth will be less than the bank’s forecast. Ramsden warned that a no-deal Brexit without a transition period would have “large negative economic effects”. Ramsden added that even if the U.K. crashed out of the EU without a deal, it did not automatically mean that interest rates should be cut.

Reports that China has raised the ante in a bitter trade dispute rocked global equity markets on Wednesday. Chinese media has reported that China is threatening to curb the supply of rate metals to the U.S. These products are used in the production of items such as cell phones and electric cars, so any interruption in supply could hurt U.S. technology companies. Technology company listings on the FTSE, such as Micro Focus and Vodafone, posted sharp losses on Wednesday. Investors remain jittery over escalating tensions between the U.S. and China, and this latest salvo from China is a reminder that the trade dispute continues to cause turmoil on the equity markets.

Equities lose their bonding

Economic terrorism has equities and bond yields under pressure

Economic Calendar

Thursday (May 30)

  • 8:30 US Preliminary GDP. Estimate 3.1%. Actual 3.1%
  • 19:01 British GfK Consumer Confidence. Estimate -12

*All release times are DST

*Key events are in bold

FTSE, Thursday, May 30 at 11:25 DST

Previous Close: 7,185 Open: 7,189 High: 7,237 Low: 7,187 Close: 7,221

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

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