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Europe higher after Chinese concession to US over trade talks

Sentiment is positive in Europe as trade talks between the US and China appear to be making progress. 

Beijing has offered to buy $70 billion worth of US goods in exchange for having no further tariffs imposed on Chinese imports to the US. President Trump likes to play hard ball and it seems his tactic is working. 

Later today, the Italian Chamber of Deputies will vote on the new coalition. The anti-establishment parties want to raise public spending while cutting taxes in a bid to stimulate the economy. Italy is already heavily indebted, and further borrowing could weigh on investor confidence. The FTSE MIB is lower on the session.

Shares in Oxford BioMedica surged after the company confirmed it is entering into a licencing agreement with Axovant Sciences. Oxford BioMedica have developed a treatment for Parkinson’s disease, and Axovant Sciences are well positioned to bring it to the market as quickly as possible. The deal could be worth up to $842.5 million for Oxford BioMedica – provided certain sales and regulatory milestones are achieved. The stock hit its highest level in nearly 10 years, and if the bullish move continues it could target 900p.

Workspace revealed a 91.9% jump in full-year pre-tax profits to £170.4 million, which easily exceeded analysts’ forecasts of £80.65 million. Underlying property valuation rose by 5% and net rental income surged by 30%. The property specialist upped the total divided by 30%. Workspace plans to raise approximately £190 million through issuing new shares, and that would help finance capital expenditure. Workspace believes the expansion would add to asset valuations and rental income. Despite the robust figures and the optimistic outlook, the shares are in the red. The stock has been in a solid uptrend since October 2016, and today’s move lower might see new buyers enter the fold.

British Land shares are down 0.8% at 685p after Credit Suisse lowered its rating for the stock from ‘neutral’ to ‘underperform’, and trimmed its price target from 710p to 695p.

EUR/USD is higher this morning after two European Central Bank (ECB) policy makers, Peter Praet and Jens Weidmann, issued hawkish statements. Mr Praet foresees an increase in wage growth and predicts that inflation will edge up to the ECB’s target. Mr Weidmann confirmed that it is ‘plausible’ the ECB could wind down its bond-buying scheme this year. Talking about ending the stimulus package is different from actually ending it, but for now traders are content to snap up a relatively cheap euro.

Mexico has hit back at the US in the form of tariffs on a wide range of products including pork, potatoes, certain cheeses and steel. US stocks like Tyson Foods and Dean Foods might come under pressure this afternoon because of the levies.

We are expecting the Dow Jones to open up 106 points at 24,905 and we are calling the S&P 500 up 8 points at 2,756.

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