FTSE 100 preview: Downtrend to continue amid trade war fears

on Mar 2, 2018

The UK benchmark index looks set to open lower this morning, extending yesterday’s losses, with comments by US President Donald Trump fuelling trade war concerns. On the corporate front, GKN (LON:GKN) is reportedly in talks to offload its automotive business amid an ongoing takeover battle with Melrose Industries (LON:MRO).

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Downtrend to continue

IG’s opening calls suggest that the FTSE 100 will kick off the last session for the week 0.56 percent lower at 7,135 points. Today’s downbeat start is set to come after US shares retreated last night, after President Trump said that the US would implement tariffs on steel and aluminium imports next week.

“That could really spook the market,” Marc Chaikin, CEO of Chaikin Analytics, told CNBC. “The biggest wildcard would be a trade war and nobody should be excited for that.” Asian shares have tracked the US lower this morning.

Reuters quoted Robert Carnell, head of research, Asia-Pacific at ING, as commenting that the world was standing “on the brink of a trade war as Donald Trump announces severe tariffs on steel and aluminium – forget the yield curve – this is how recessions start”.

The FTSE 100 stumbled on Thursday, shedding 56.27 points to end the session 0.78 percent lower at 7,175.64, pressured by downbeat factory data out of the UK.

Friday’s releases

Today’s macroeconomic statements include the UK’s construction purchasing managers’ index for February, due out at 09:30 GMT. IG reports that the index is expected to have climbed to 50.5 to 50.2. On the other side of the Atlantic, Canada’s fourth-quarter gross domestic product data will be announced at 13:30 GMT.

In company news, the Financial Times reports that GKN is in talks about potentially selling its automotive business to US autoparts maker Dana.