FTSE 100 falls as trade fears show no sign of abating
By Victor Reklaitis
U.K. stocks lost ground Monday, with analysts blaming the drop on fresh worries about a potential global trade war, after the U.S. over the weekend continued its tough talk on that front.
Investors are still concerned that trade tensions between the U.S. and major trading partners such as China and the European Union could develop into a big drag on the global economy.
President Donald Trump on Sunday issued new threats against America’s trade partners, calling for them to remove trade barriers and tariffs, or face the consequences.
Barclays Lower British Pound Forecasts vs. Euro and Dollar for Remainder of 2018, Recovery seen in 2019
By Gary Howes
Pound Sterling will no longer rise against the Euro and is set to fall against the US Dollar during the rest of 2018, according to the latest currency forecasts from UK high-street lender Barclays.
A regime shift in foreign exchange markets has seen the US Dollar Index – a broad measure of overall Dollar strength – convert what was a 4% loss during 2018 at the end of the first quarter, into a near-4% gain by the end of June. The strength has certainly been felt by the Pound which is now 1.78% down on the Dollar in 2018.
A strong Dollar plays a meaningful part in Barclays’ decision to downgrade forecasts for the Pound-to-Dollar and Euro-to-Dollar rates this month, although much of the case for a weaker Pound is entirely the result of economic and political risk in the UK and Europe.
Brexit will be discussed on Friday, June 29 from 08:00 B.S.T onwards, so look for headlines concerning the matter to be delivered throughout the day.
Of the other important driver of Sterling, the Bank of England, Barclays forecast no interest rises in 2018 when markets in general are anticipating a rate rise in August thanks to the Bank of England’s June event that contained unexpectedly hawkish guidance.
Issues beyond OPEC will drive oil prices in coming years – FT
By Dhwani Mehta
In an opinion piece published by the Financial Times (FT) over the weekend, the editor addresses two key issues beyond the OPEC decision that will shape up the oil markets in the coming years.
“The first is the situation in Venezuela, which has gone from bad to worse over the past two months. In the short term, the situation remains the greatest uncertainty hanging over the oil market. The country’s production of crude oil fell to 1.36m barrels a day in May, 600,000 b/d down from its level a year ago.
The International Energy Agency has raised the possibility that output could fall to 800,000 b/d next year. Given the dramatic collapse in Venezuelan living standards, it is hard to imagine that the government can remain in power. But so far predictions of political change have not been fulfilled.
The second, and potentially more destabilizing, issue in the longer term is the prospect of a sharp increase in the production of so-called “tight oil” from shale rocks in the US. Tight oil production is now running at more than 5m barrels a day and will this year lift total US oil output to over 11m b/d — the highest figure for almost 50 years.
The growth in shale production over the past 10 years has been profoundly disruptive, first for the gas market and then for oil. The US is now an exporter of both oil and gas and is no longer dependent on imports from the Middle East — a shift with major political implications.“
Australian Dollar Outlook Bearish on Rising Trade War Tensions
By Justin McQueen
Increasing concerns over a full-blown trade war between the US and its largest trading partners (China and the EU) have been at the forefront of investors’ minds. The tit-for-tat trade spat with the US and China have shown no significant signs that either party will back down, as such, the Australian Dollar has come into the crossfire, given its large exposure to the Chinese economy and with trade war uncertainty set to continue in the months ahead, the AUD could grind lower. Additionally, AUDUSD downside is clear in option markets with 1-month risk reversals highlighting that AUD put bias is at the highest since February.
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