European equity markets have been rattled by the war of words between Donald trump and Kim Jong-un.

The US President declared there would be ‘fire and fury’ if North Korea threatened America again. Investors are not taking any chances, and are cashing in their positions. Dealers don’t like taking on unnecessary risk, and remaining long during this sort of heightened political tensions is not for the faint-hearted.

China’s inflation level cooled in July to 1.4% from 1.5% in July last year, while the producer price index (PPI) remained at 5.5%. The slip in inflation sends out a message that demand in China is dwindling, and this has worried investors. Western companies are expending their businesses in China, and a drop in consumer appetite is that last thing they want to see.

Legal & General announced a solid set of first-half figures. The company posted a 43% jump in profits after tax, and the interim dividend was upped by 7.5%. Retail sales at the annuities division nearly doubled when compared with the same period last year, and assets under management (AuM) rose by 13%. The share price is down 2% today, and I suspect it is lower due to the broader sell-off rather than the first-half figures. The share price has been in an upward trend since June last year, and the stock is 25p shy of the all-time high of 295p.

The EUR/USD shrugged off the strong industrial production figures from Italy, in June it increased by 1.1%, on a month-on-month basis, and traders were expecting a rise of 0.2%. On a year-on-year, it jumped by 5.3%, while economists were anticipating a 3.4%.

At 3.30pm the energy information agency (EIA) will release the latest oil inventory figures, and the consensus is for a decline of 2.5 million barrels, and that compares with last week’s decline of 1.52 million barrels. WTI and Brent Crude oil are higher this morning.

We are anticipating the Dow Jones to open 43 points lower at 22,042, and we are calling the S&P 500 down 7 at 2467.

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