Financial market research and analysis

The markets have jumped out of the starting blocks on Monday, in what looks set to be a full-on trading week. Trade tensions, UK politics, Brexit and US non-farm payrolls will ensure volatility across the week. Its a good start for trading in the final quarter of the year.

The Canadian dollar charged to a four-month high overnight, supported by news that Canada and the US had reached an agreement on how to revamp Nafta. Beating the Monday deadline, the two sides have managed to hammer out a deal, which joins an agreement reached between the US and Mexico in August. The trilateral agreement brings an end to months of uncertainty surrounding North American trade. The resultant risk on sentiment has seen equity futures rally strongly overnight. The S&P futures are back towards record territory, whilst the safe haven yen tumbled to a fresh year to date low versus the dollar.

Investors have been waiting patiently for some good news regarding trade since the US escalated trade tensions earlier this year. There is clear elation that a deal has been struck; with the Canadian dollar up 0.6% and the Mexican peso rising 0.8%. However, concessions have been made and the deal has come at a cost to Canada. The US have proved they are no walkover when it comes to re negotiating these deals.

FTSE points lower as Chinese manufacturing pmi disappoints
Whilst markets across the globe are rallying on an improved picture for global trade, FTSE futures are bucking the trend. The FTSE is pointing to a lower start to trading on the opening bell, with miners expected to weigh heavily. Metals across the board traded lower overnight following yet another round of disappointing data from China. The Chinese manufacturing PMI fell significantly more than expected in September to 50.9. The sector just managing to remain in expansion is the clearest sign yet of the impact of the US trade tensions on the Chinese economy. Miners traced metal prices lower in Australia, a trend which looks set to be followed by the heavily weighted miners on the FTSE.

Pound steady as Tory annual conference begins
The pound was looking resilient overnight as the Tory annual party conference kicked off. With Theresa May and her Brexit Chequers plan under attack from both the Eurosceptics and the Remainers, the PM will have to work hard to cling onto power. Brexit is driving the pound right now and the Tory conference over the coming days could dictate whether Theresa May continues to lead the UK through the process. So far, the Eurosceptic tone from the speeches has not impacted negatively on the pound overnight. However, sterling’s resilience will depend largely on whether May looks capable of seeing her deal through.

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