Financial market research and analysis

S&P and Nasdaq closed lower overnight amid a deep sell-off in tech stock. Led southwards by Netflix, which dived over 6%, the likes of Amazon and Microsoft also fell over 2.5% as Facebook COO and Twitter CEO appeared before Congress. Regulation surrounding the tech giants is a sensitive topic at best, but when you have the likes of Sheryl Sandberg and Jack Dorsey dragged before Congress in a hearing that raises concerns over regulation – the markets are never going to like it. It is fair to assume regulation is going to pick up from here onwards and that is unnerving investors.

Trade talks lack progress

Traders on Wall Street were also keeping an eye on simmering trade tensions as talks kicked off between the US and Canada in an attempt to settle difference and attempt to secure a future deal on trade. This meeting comes hot on the heels of talks last Friday where the US and Canada failed to secure a new agreement to replace NAFTA. Hopes aren’t running particularly high that an agreement will be reached, particularly given Canadian Prime Minister Justin Trudeau’s indication that the country would not bow to certain US requests at talks this week.

US talks with China are not offering much optimism to traders either, with no signs of any form of a deal coming soon. Today the consultation period ends for additional US tariffs on $200 billion worth of Chinese imports, which will unnerve investors. Trump is showing no signs of slowing down or easing back on his protectionist policies, furthermore the US economy is firing on all cylinders offering few motives for Trump to hold back.

Emerging market fears show no signs of evaporating

Trade fears and concerns over emerging markets pulled Asian markets lower overnight. Investors continue to fret if the worst is yet to come for the emerging markets following the Turkey and Argentine currency crisis. Developing world equities sold off into bear market territory fuelling fears that there could be more to come.

Despite a weaker session on Wall Street thanks to tech and trade tensions and the sell in Asian on trade tensions and EM fears, European futures managed to move tentatively higher overnight only to give up some of those gains as the open approaches offering expectations of a mixed start.

Pound remains above $1.29 overnight

The pound was seen grinding higher last night, sitting above $1.29 but short of the peak of $1.2983 reached in the previous session on rumours that Germany was willing to drop key Brexit demands. Whilst Germany has since denied that this is the case, the markets are looking at this as a case of there is no smoke without fire, and investors keeping a level of optimism that a Brexit deal still could be fudged through. There is no high impacting UK data for pound traders to focus on; developments in Brexit and movements in the dollar ahead of the US non-farm payroll on Friday will direct cable.

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