The FTSE and other European indices are slightly lower, affected by comments from the Federal Reserve, rising tensions over Iran and no signs of a resolution to the Sino-US trade conflict. The increasing likelihood of a no-deal Brexit is also eroding some investors’ enthusiasm.
US stock fall lifts WTI prices
A decline in US domestic crude oil reserves has lifted West Texas oil prices overnight with additional support provided by brewing tensions between the US and Iran. WTI gained 2% early Wednesday having already moved nearly 9% higher last week amidst tensions in the Gulf threatening to escalate into a more serious conflict.
Fed member comments boost dollar
The dollar is a touch stronger as the currency market tries to guess and second-guess the Fed’s next move. Comments from one FOMC member saying that the expectations of a July rate cut are overdone have provided dollar bulls with a reason to buy.
However, the worsening rhetoric on Iran is causing some shift away from the dollar and into safe haven currencies.
For the moment there seems to be no light at the end of the tunnel for sterling. The more it seems that nothing can challenge Boris Johnson’s lead in the party contest the more sterling is being sold off on fears of a no-deal Brexit. The price curve is now one clean line lower, without any counter-balance to the decline.