Donald Trump was at his inflammatory best yesterday, 3 December. Ahead of a NATO summit in the UK’s Watford, the US president rattled global stock markets by saying there was “no deadline” for a trade deal with China and that it wasn’t up “to if they [Beijing] want to make it, it’s if I want to make it”.
The FTSE 100 fell by nearly 2 per cent to 7,134, with stock markets in the US following suit as investors fear the ongoing trade war is now further away from resolution. The Dow Jones dropped by over 400 points to 27,325.
Trump also threatened to levy a punitive 100 per cent tariff on French goods, including wine and cheese, in retaliation to a new digital tax against US tech companies.
The news weakened the Dollar against its peers, but it also meant that Sterling had another boost.
The trade news, allied with more positive polling data for Boris Johnson, pushed the Pound up above $1.3000 for the first time since May 2019. A Kantar poll released yesterday showed the Conservatives stretched their lead by one point from last week to 44 per cent. The Labour Party stayed at 32 per cent.
Promises and expectations
Meanwhile, the UK and EU services sectors will take the limelight this morning:
09:00 (GMT) – EU services PMI for November – Previous: 52.2; Forecast: 51.5
09:00 – EU composite PMI for November – Previous: 50.6; Forecast: 50.3
09:30 – UK services PMI for November – Previous: 50; Forecast: 48.6
The EU release is unlikely to cause too much volatility as the manufacturing sector continues to be the centre of attention in the bloc. However, if today’s release misses expectations and drags down the composite number, the single currency is likely to give up some of its gains against the Dollar.
Making up over 70 per cent of the UK economy, the services sector has been battered by Brexit uncertainty. And it may be too early for a boost in confidence, but if the release shows promise, it could be enough for the Pound to take another leg higher.
Sterling to continue its ascent if Euro data disappoints
Trade deal at risk as Trump rattles sabre