Europe open – Trade, Labour manifesto, gold, oil

Stocks slip on trade doubts

A third day in the red for equity markets as the US-China trade deal – or lack of – continues to dictate market sentiment.

Source – Thomson Reuters Eikon

It’s becoming increasingly doubtful that negotiators are going to find a solution that enables a deal to be signed before the end of the year, leaving Trump in an unenviable situation on 15 December, when new tariffs are due to come into force.

The delayed tariffs may come too late to negatively impact the US holiday season, not unintentionally of course, but they could still hit the US economy in an important election year and further damage the already strained Sino-US relationship.

This comes at a time when Washington is already putting further strain on the relationship after Congress overwhelmingly passed a bill supporting protesters in Hong Kong. While not unexpected, it has angered Beijing and they’ve lashed out through the usual channels.

Labour hoping to make up lost ground with ambitious manifesto

Labour will release its manifesto on Thursday as the party seeks to win over the electorate and close the poll gap with what it considers to be the most ambitious domestic agenda in decades. Labour are still well behind the Conservatives in the polls but as we’ve seen in recent years, they’re not always overly reliable.

Markets have also been plenty wrong in the past, just look at the positioning pre-referendum night. But they’re also relatively relaxed about the election, with the pound continuing to trade at the upper end of its recent range. It’s consolidated just short of 1.30 against the dollar since the election was called and has shown little sign of budging since.

GBPUSD Daily Chart

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Gold struggling at key resistance level

Gold bulls are not giving up yet but the fight may be in vain, with $1,480 continuing to resist any marches on it. Gold is slightly higher in early trade but struggling to gather the momentu  m needed to make the next step. The consolidation we’ve seen over the last 10 days has provided some reprieve for the yellow metal but it hasn’t yet changed the outlook, with further declines potentially on the cards.

Gold Daily Chart

Oil edges lower after rebounding on Wednesday

Oil prices rebounded strongly on Wednesday, aided by a much more modest inventory build of 1.4 million, reported by EIA. This is much lower than the near six million number reported by API a day earlier which contributed to the plunge we saw in oil prices. Crude is a little off today though, in line with the broader market sentiment which has turned a little more negative this week.

Brent Daily Chart

Economic Calendar

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