Hoshua Mahony, Market Analyst at IG, a global leader in online trading, shares views
An overnight threat from North Korea has pushed investors back towards havens, leading to a fall in the FTSE. With Theresa May due to speak today, the pound comes into focus amid a €20 billion offering to get negotiations kicked off.
• Stocks suffer amid risk-off sentiment
• Theresa May offer could be decisive moment
• Eurozone PMI surveys highlight continued outperformance
Global risk sentiment within the markets has taken a hit this morning, as the US-North Korean standoff has ratcheted up once more. Coming off the back of Donald Trump’s threat that the US could totally destroy North Korea, they have finally responded in kind, with their foreign minister stating that the leader could detonate a hydrogen bomb over the Pacific. Unsurprisingly we have seen the value of gold and the yen gain ground, with overnight losses in Asian equities leading to a similarly downbeat tone in Europe in the early hours of trade.
UK markets are waiting in anticipation of today’s appearance by Theresa May in Florence, with many hoping that today will represent a breakthrough moment in Brexit negotiations. With today’s Brexit focused address, Theresa May is expected to propose a €20 billion conciliatory offering to enable the beginning of negotiations for a transitional deal. There is a growing fear that without any progress in Brexit negotiations, we will see firms take business decisions based on an increasingly fearful outlook of the UK.
Eurozone PMI surveys have provided us with yet another reminder of the impressive outperformance we have seen throughout mainland Europe throughout 2017 thus far. With the German, French and eurozone manufacturing PMI surveys all hitting a six-year high today, it is clear that there is a great renaissance throughout the manufacturing sectors of Europe. Given that the PMI surveys typically provide us with a leading indication of how businesses are faring, there is reason to believe that today’s readings will provide a significant boost to eurozone Q3 growth prospects.
Ahead of the open we expect the Dow Jones to open 15 points lower, at 22,344.