FTSE flirts with the flat line
The FTSE is flirting with the flat line this morning, opening marginally higher only to dip slightly and then come back again.
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Like other European bourses the market is digesting conflicting news - on the one hand the Turkish lira, the cause of global stock markets’ panic this week, seems to have stabilised, on the other Turkey has ramped up tariffs on US imports of cars, alcohol, rice and cosmetics following President Trump’s decision last week to double import tariffs on Turkish steel. Given the USA’s tariff decisions over the last few months, Turkey’s tariff response is unlikely to remain unanswered by the US.
German and French markets are trading slightly higher but Italy’s FTSE MIB index is down 0.3%, knocked slightly by a major incident on Italian roads where a collapse of a bridge cause the deaths of 35 people.
Dollar hits 13-month high
The dollar has been firming for a while now but has received further wind in its sails from the collapse of the lira which has been particularly negative for European markets and has weakened European currencies. The pound is 0.08% weaker against the greenback at 1.2717 while the euro is trading down 0.11% at 1.1334. The US currency is also firmer against the yen and the Canadian and the Aussie dollar.
Commodities slide pulling down mining companies
The FTSE leader board of fallers is populated by eight mining companies this morning as traders count the effects of the stronger dollar on the companies’ earnings. A stronger dollar spells bad news for miners, affecting not only commodity prices but also companies’ outgoings. However, the market may be overreacting to the current dollar strength as this will also translate into higher earnings along the line.
BHP Billiton is down 1.01%, Glencore is trading 0.96% lower and Anglo American is down 0.99%. Copper miner Antofagasta, which dived 6.8% Tuesday as it warned the market that trade tensions will impact its bottom line, was bid down 1.4%.
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