Trade worries are back and markets are struggling for direction

Markets are struggling for direction on Wednesday after trade worries bubbled back to the surface.

President Donald Trump said during a cabinet meeting on Tuesday afternoon that he could impose further tariffs on Chinese imports. The trade war hasn’t been at the forefront of investor worries since Trump and China’s Xi Jinping agreed a tariff truce at the G20 summit last month.

Investors are weighing the resurfaced trade worries against expectations of a Federal Reserve interest rate cut in two weeks.

Stocks opened broadly flat, with the Dow slipping 0.1%, or 30 points at the opening bell. The S&P 500 opened little changed, while the Nasdaq Composite inched slightly higher. European markets are broadly lower.

“The markets are grappling with more trade-related news, edging most risky assets lower as a result,” wrote Mark McCormick, global head of FX strategy at TD Securities.

Oil prices are rebounding from Tuesday’s 3% drop, with US oil futures up 0.8% at $58.06 per barrel, according to Refinitiv. Secretary of State Mike Pompeo said Tuesday that Iran was ready to come to the negotiating table again, which led oil prices lower. If Iranian oil was available for purchase without the threat of sanctions again, prices would decline on the added supply.

The US dollar is ever-so-slightly weaker, with the ICE US Dollar Index down 0.1%. Nevertheless, the buck touched a fresh high against the British pound earlier.

Sterling was dragged lower by Brexit uncertainties and traded at its lowest level since April 2017 earlier. The pound since rebounded, last buying $1.2420, up 0.1%.