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Equities rally as political mood lightens

Stock markets are in positive territory this morning as Kim Jong-Un, the North Korean leader, has stated he is willing to meet US president Donald Trump. 

The announcement from the North Korean premier has lightened the political mood, and this has buoyed investor sentiment. 

Wesfarmers, which owns Homebase, has agreed to sell the DIY chain to Hilco for £1. Traders foresee store closures, even though none have been confirmed yet. Shares in Kingfisher and Travis Perkins are in demand this morning as investors predict both companies will benefit from the potential disruption at Homebase. Weak sales across the UK DIY sector as a whole was part of the reason Wesfarmers decided to dispose of Homebase.

Pennon Group shares are higher this morning after the company announced a 3.5% rise in profit and a 2.9% jump in revenue. The divided was 38.59p, up 7.3% from last year. The company cited falling costs and higher net tariffs for the strong performance. A change in attitudes towards recycling is likely to assist the company in the medium to long term. Pennon confirmed there has been strong demand for energy recovery facilities and waste services. The share price gapped higher this morning, and if it holds above the 200-day moving average at 733p, it could target 800p.

EUR/USD is up on the day after the German IFO business climate report showed improvement. The May reading was 102.2, up from 102.1 in April, while economists expected 102. Germany has been going through a soft patch recently, and the better-than-expected report could stem the sell-off in the euro.

GBP/USD experienced volatility when the first-quarter UK GDP came in at 0.1%, meeting estimates. Sterling still hasn’t broken out of the downtrend it has been in recently, and if the bearish move continues it could target 1.3300.

We are expecting the Dow Jones to open up 70 points at 24,881 and we are calling the S&P 500 up 7 points at 2,734.

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