PhillipCapital - UK Financial News
04 June

PhillipCapital - UK Financial News

U.S. President Donald Trump kicks off the second day of his visit to the U.K. by meeting with American and British business executives. Exiting Prime Minister Theresa May, who will co-host the talks will call for governments to embrace the opportunity of Brexit to seal a bilateral free-trade deal. Concerns about security cooperation if the UK goes ahead with Huawei’s 5G network have also been raised by the Americans. Trump started his visit tweeting insults at the mayor of London before heading off to see the queen and then making a hint that a “big” trade deal could be on the cards once the U.K. leaves the European Union. Before arriving, he called on the U.K. to throw off the "shackles" of EU membership and use his signature negotiating tactic in Brussels: walk away. Large-scale protests are planned during his visit, including at London's Trafalgar Square today where opposition leader Jeremy Corbyn will also attend.


News has shifted to monetary policy this week with Australia’s central bank cutting its cash rate to a record low on Tuesday and India tipped to ease on Thursday.  The AUD fell 17 pips in 10 minutes, after the RBA slashed rates to its record low of 1.25% although the move was widely expected by markets. Asian shares fell today as weak economic indicators and an intensifying Sino-U.S. trade war inflamed concerns about global growth, supporting safe-haven assets such as bonds. In early European trade, Euro Stoxx 50 futures were down 0.36%, German DAX fell 0.31%, FTSE futures eased 0.27% and France’s CAC 40 futures lost 0.53% to 5,193. Losses across Asian equity markets on Tuesday followed losses in the US where Nasdaq dropped into correction territory. MSCI’s was down 0.3%, after rising as much as 0.18%. China’s blue-chip CSI300 index was 0.94% lower and the Hang Seng lost 0.66%.


As an economic slowdown starts to dent energy demand, oil prices fell yesterday but markets won some support after Saudi Arabia said a consensus was emerging with other producers about extending supply cuts. Demand-side worries have over lapsed supply-side disruptions as global oil benchmarks notched multi-month lows. US trade protectionist policies on China and Mexico have rattled market sentiments as traders brood over looming weakness in global petroleum demand. Brent crude futures were 0.6% below last session’s close and U.S. West Texas Intermediate (WTI) crude futures were at $52.98 per barrel. Oil futures are around 20% below 2019 peaks reached in late April, with May posting the sharpest decline since November. Coal and gas are also being hit hard by the downturn.


A consensus has been reached in Italy where coalition talks seem to have reached an agreement after PM Conte threatened to quit if the feud continued. A flat tax measure and power to local governments have been agreed by the 5* Movement still bruised by the heavy losses suffered in the European elections where the other coalition party, the League, won decisively.


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