European equities drifted lower as trade tensions and fears about global growth continue to weigh on market sentiment. The FTSE 100 was struggling to hold onto 7,200 on Monday morning. The DAX shed 1% to drop beneath the 12,000 round number support.

President Trump on Friday raised tariffs on $200bn worth of Chinese imports from 10% to 25% and is now examining slapping tariffs on all remaining goods imported from China – worth about $300bn. The rhetoric and posturing is not good for risk and events over the last few days diminish the likelihood we will see a meaningful deal done. When we look at the posturing with Iran, it looks like the geopolitical hawks in the White House are in control. And unlike the weak Theresa May, Donald Trump is prepared to do no deal rather than a bad deal.

The S&P 500 SPX somehow managed to close higher on Friday, but futures are now pointing towards a sharply lower open with renewed pressure on the downside. Somehow or other the Vix closed the week lower than it’s starting point but we this rising again now with the fear gauge printing a 19 handle again. This could push up past 20 again.

A paucity of eco data this week will keep the markets looking at Trump and China. Fed speakers this week will likely reiterate the current party line. US retail sales will be important with expectations relatively upbeat that US consumers are putting their money where their mouth is and spending more.

So what’s the ultimate trade war hedge? It may well be cryptos – not really but Bitcoin has spiked again, this time breaching the $7k mark. The massive resistance at $6,400 was taken out having been the big hurdle for the bulls.

Why? Who knows, but the momentum is building for bulls and you cannot ignore that once Bitcoin builds up a head of steam, the mania can come back, and the momentum traders will pile in. This is a pure momentum play and the chart is looking parabolic again.

On the upside, next resistance comes at around $7,300, last September’s high, before the $8,000 round number, which is a massive target.

However, the market does increasingly look overbought, which could precipitate a pullback. 14-day RSI is close to 90 – I.e. extremely overbought. We note that in April when the RSI was last at this level it did presage a pullback, only a very temporary one. Price action has now extended well north of the upper Bollinger band.

FX markets remain remarkably calm. EURUSD has cemented its gains above 1.12 but remains trapped within the downwards triangle. GBPUSD doesn’t want to move very far from the 1.30 level. Little real bid for the yen despite it being the main risk-off proxy….zzzzzzz.

In UK equities, Centrica and boss Iain Conn are in a jam. The company is facing a cocktail of headwinds and it is increasingly clear it will not be able to defend the dividend for much longer. Management is clinging to its full year guidance but doesn’t seem to be all that confident it can achieve it. The share price reflects despair in the strategy. Iain Conn will face more pressure – quite how the 44% pay jump can be justified, I’ll never know – absurd. Unless the July update comes with a convincing strategic update I wouldn’t think he’ll be sticking around for much longer.

A tough first four months to the year was explained by falling natural gas prices, the default tariff cap in the UK, whilst blame was also placed on warmer weather – can Centrica start to talk about climate change as a reason for its poor performance?

FY adjusted operating cash flow is expected in the £1.8-£2.0bn range, which is of course below the £2.1-£2.3bn range for 2018-20. The £70m from the price cap is only about of the shortfall in cash flow. From the tone of the update it does not sound like they are terribly confident of achieving even this lower target. The first four months has been challenging but this was largely expected. It’s rather foggy outlook that worries.

Even with the aggressive cost cutting going, there are doubts about how long you can keep doing that. And even then, it’s all weighed to the second half – £58m of £250m of the expected annualised efficiencies delivered so far this year. Divestments, including the sale of Clockwork, should bring in another £500m or so. It all rather looks like Centrica is scrambling around looking for cash to protect the divi and buy some time for Iain Conn.

Operating performance in the UK Consumer market remains very tough. Centrica is leaking customers too quickly – UK Home energy accounts down another 234k in the first four months of the year, in line with the 6%, (740k) lost last year. This is not sustainable and must be arrested as a matter of priority.

Some better figures elsewhere – Distributed Energy & Power forward order book up 58%; Connected Home gross revenue up 70%. E&P production at Spirit and Rough was higher than expected. But with shares on the floor, today’s update does little to reassure investors.