FTSE looks to recover from 8-week low

Stocks in London are looking to recover this morning after the markets made a bad start to the new week with the FTSE dropping to its lowest level in over 8 weeks. Ongoing trade concerns remain a major potential source of worry for equities and they are certainly weighing on risk sentiment. The pound has been pretty quiet in recent trade with the currency consolidating on its recent gains after last Thursday’s surprise hawkish shift from the BoE although there has been some mild selling on comments form incoming MPC member Haskel who appears to be potentially less hawkish than McCafferty who he will replace in September.  

Is the uptrend over for US stocks?

It’s not just UK markets that have been impacted by the souring of risk sentiment of late with benchmarks on the Continent, the Far East and the US all declining of late. The German Dax 30 is one of the most vulnerable global indices to trade tensions with a fair-size weighting of automakers (Volkswagen, BMW, Daimler) directly impacted by US tariffs on imported cars. The leading benchmark for Chinese equities recently slipped into bear market territory while in New York the Dow ended below its 200 day simple moving average (SMA) last night for the first time since the 2016 election. Technical traders often use the 200 day SMA as a trend identification technique and in closing below there on Monday, the market could be seen to have ended the uptrend that has pushed prices higher for the past year and half.    

Incoming BoE member Haskel agrees rates “likely to rise”

Jonathan Haskel, who will replace Ian McCafferty on the Bank of England rate setting committee from September has been talking this morning on the economy and offering his views on monetary policy. Not too much is known regarding Haskel’s stance on policy but his comments today seem to suggest he may be more centrist than McCafferty, who has consistently been one of the most hawkish members in recent years. Haskel has said he agrees with the bank’s broad direction for interest rates stating that they shouldn’t “dally” on hiking but he also struck some more dovish chords, in saying there is scope to cut rates slightly lower in the case of an economic downturn while suggesting the possibility of more QE if needed.  

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