European markets opened lower on Wednesday, following the trend established overnight by most of Asian shares, after a risk-off wind blew across the world. Despite the good news of the awaited Phase One trade deal signing due later today, investors’ enthusiasm has been killed after Washington recently adopted an offensive tone towards China. The Trump administration confirmed the current set of tariffs on $360b of Chinese goods won’t be lifted before the result of this year’s US presidential election in November despite this initial trade deal. Sources close to US officials also added the Government was close to publishing a new rule that will increase its power to block foreign-made goods sales to Huawei, adding even more tension ahead of today’s signing.
Finally, market sentiment is also being impacted by escalating tensions in the Middle East after Iranian President Rouhani said US forces were not safe in the region today and that EU forces may also be concerned soon. This complicated and unclear macro landscape makes trading difficult for stock investors, with a real risk of a volatile but directionless trading day.
Photo by Hadi Yazdi Aznaveh.
All the eurozone markets are down with Italy the worst performer with the FTSE-MIB of Milan trading slightly higher than its major short-term support at 23,700pts. British shares are the best performer, which are benefiting from dovish remarks from the BoE that could see further rate cuts in the near future. The FTSE-100 Index is trading close to its first available resistance at 7,630pts, a break-out of this zone could drive prices up to 7,670pts on a very short-term basis.
