European stock markets are showing barely any sign of life with the FTSE notching up 0.3% and the DAX sliding 0.4% this morning. Some of the malaise was created by the stronger than expected job report in the US Friday which doused hopes that the Fed would cut rates at some point in July.
Imperial Brands (LON:IMB) rallied the most on the main index after the company decided to revise its dividend policy amid a GBP 200 million buyback. On the declining side British Airways parent IAG (LON:ICAG) lost ground as the company could end up having to pay a large fine for data theft.
Sterling barely in the black ahead of UK GDP data
Having declined for nine consecutive weeks the pound is starting the new week on an undecisive note, trading almost flat against both the dollar and the euro.
German export data showed that exports increased in May but this was not enough to lift the euro because the May uptick of 1.1% was not enough to counterbalance the decline in April shipments of 3.4%. Sterling traders are now looking to Wednesday when the UK industrial production, manufacturing and most crucially monthly GDP data will shed a light on the state of the UK.
The bank’s Financial Stability Report due Thursday is expected to show a weaker pulse for the UK economy in the second quarter, including weaker spending and shrinking manufacturing.
For the dollar Fed Chairman Jay Powell's testimony to Congress on Tuesday will be key particularly after Friday’s stronger than expected jobs report quelled expectations that a Fed rate cut is imminent.
Oil prices slide as focus shifts to unresolved trade tensions
Now that OPEC has greenlighted the extension of the existing production cuts the oil market is beginning to turn lower, assuming that most of the upside has already been priced in except for geopolitical tensions in the Middle East.
Instead focus is shifting back onto global trade risks given that China and the US have not ironed out any of their differences and tariffs put in place at the beginning of June remain in place.
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