A new man from the land down under

Calls for a mildly negative open come after Wall St indices all ended the day broadly in the red, as the US-China negotiations ended with no obvious signs of progress, dashing investor hopes for a resolution of lingering trade tensions.

A new man from the land down under

FTSE 100 Index called to open -10pts at 7552, still trading sideways and looking to end the week’s last session in the same position where it began. Bulls need a break above 7585 to attempt another challenge of 2-week falling highs. Bears require a breach of 7537 rising support. Watch levels: Bullish 7600, Bearish 7518

Calls for a mildly negative open come after Wall St indices all ended the day broadly in the red, as the US-China negotiations ended with no obvious signs of progress, dashing investor hopes for a resolution of lingering trade tensions.

Market trading in Asia was mixed, with ASX up after Scott Morrison won the leadership battle to become the next Australian PM to succeed ousted Malcolm Turnbull (watch FTSE’s dual-listed Miners for potential read-across), but Chinese bourses echoed their US counterparts lower due to persistent trade worries. China’s central bank is attempted to stop the bleeding by injecting $22bn in liquidity into the local banks, with minimal results so far.

Italian newspaper Corriere Della Sera is reporting that President Trump offered to buy Italian government bonds starting next year. Watch Italian fixed income markets and banks for potential reaction.

A slight pullback in US Dollar this morning is supporting metals prices, with copper and zinc rebounding after yesterday’s losses. Gold prices are also higher as interest for the safe-haven yellow metal is stronger on trade war concerns and momentary USD weakness. Expectations of higher US interest rates later in the year, however, mean that gold’s appeal is likely temporary and may not last.

Oil prices are higher this morning as Iran sanctions are starting to take a bite from the supply side of the energy market. While Iran is currently the third-biggest OPEC oil producer, its output could fall from 2.5m bpd to below 1m bpd when sanctions take full effect.

In corporate news this morning US FDA approves Takhzyro, Shire’s new drug for treating rare hereditary swelling disease. Computacenter H1 revenue +18% YoY, adj. pre-tax profit +24.3%, dividend +17.6, the outlook in line with expectations after an upgrade in July. H2 expected to be a more difficult annual comparison due to outstanding H2 2017. Petrofac agrees to sell its 20% share in Greater Stella Area development in the North Sea to Ithaca Energy for $292m.

Air Partner announced good H1 trading in line with expectations and remains confident in achieving FY goals, with private jets segment seeing good growth. Henry Boot H1 pre-tax profits +15.9% YoY, interim dividend +14.3%, net debt -58.2%, H2 trading started well and the company is confident in meeting reiterated FY expectations.

In focus today will be the annual Jackson Hole Economic Symposium (2pm) in Wyoming, now in its second day. Fed chief Jerome Powell (3pm, centrist) is scheduled to give the keynote address on monetary policy. With the Fed under verbal “attack” from the White House over its interest rate policy and latest FOMC minutes reflecting the bankers’ unease over the global trade confrontation, markets will be closely following Powell’s remarks for indication of future policy direction and Fed’s assessment of US economy..

Other central bankers from around the world are also participating in the event (which finishes on Saturday) and may provide remarks throughout the afternoon.

In macroeconomic data today, US Durable Goods Orders (1:30pm) are expected to fall in July due to a lower amount of aircraft orders, though the metric that strips defense and aerospace should post solid 0.5% MoM growth.

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