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Stocks rally as China softens its stance

Stocks rally as China softens its stance

European equity markets are continuing on from the strong finish in the US last night and Japan overnight. 

The positive sentiment is evident as traders feel President Trump might not be as aggressive as he lets on after it was reported he might be more flexible on one point of the North American Free Trade Agreement. Now that China has hit back with proposals of sizeable tariffs on US imports, room to renegotiate a new trade relationship has opened up before the levies will actually be implemented. Beijing has indicated it is open to softening its stance, and this has boosted investor sentiment. Dealers love snapping up relatively cheap stocks, and now the mood is optimistic, they are wasting no time. 

Shares in Sophos are up 15.7% after the company stated it expects full-year billing figures to be at the top end of expectations. The cyber solutions company previously predicted an increase in revenue of between 20% and 22%, and now it expects it to be at the higher end of the range. The stock gapped higher this morning and if the positive trend continues it could target 538p (200-day moving average).

EUR/USD is softer after both Germany and France posted services figures that showed a slowdown in the growth rate. Earlier in the week the manufacturing data from the currency bloc also showed a cooling of growth, which adds weight to the argument that the eurozone is coming off the boil.

GBP/USD took a knock after the UK revealed a considerable slowdown in the services sector last month. The services PMI reading fell to 51.7 in March, down from 54.5 in February. The services sector accounts for a major portion of the UK economy, and a cooling of that magnitude could diminish the possibility of a rate hike from the Bank of England next month.

At 1.30pm (UK time) the US will release the latest initial jobless claims report and the consensus is for an increase to 225,000, up from 215,000 last week.

We are expecting the Dow Jones to open up 66 points at 24,330 and we are calling the S&P 500 up 12 points at 2656.

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