Eurozone equity markets are set to finish the day in positive territory thanks to the progress made between US and Chinese trade negotiators. 

Europe

The US was scheduled to increase its existing tariffs on Chinese imports next month, but that has been delayed, and that announcement has lifted investor sentiment. The DAX and the IBEX 35 reached three month highs, while the CAC 40 hit its highest level since October. The FTSE 100 was in positive territory earlier in the day, but a move lower in the oil market weighed on commodity related stocks like BP, Royal Dutch Shell and BHP Billiton. The FTSE 100 has recovered some ground and is largely unchanged on the day.

Persimmon shares are in the red after it was reported over the weekend that it might be stripped of its ‘help to buy’ status. The home builder has benefited greatly from the government scheme which assists first-time buyers get onto the property ladder. Persimmon has been subject to complaints in relation to property standards and the government is reviewing which companies will be allowed participate in the scheme after 2021, and investors are worried Persimmon might be excluded. The stock gapped lower this morning, and while it holds below the 200-day moving average at 2,370p, its outlook should remain negative.

Associated British Foods confirmed that Primark’s first-half like-for-like sales dropped by 2%, and analysts were expecting a 1.6% decline. Total revenue increased by 4% for the period, but traders were expecting 4.8% growth. The firm performed well in Spain, France and Italy, but underperformed in Germany. Total UK Primark sales ticked up 2% and the US operation performed ‘strongly’, and full-year guidance remains unchanged. The stock has been in decline since November, and a break below 2,200p might bring the 2,000p region into play.

Provident Financial has knocked back a £1.3 billion offer from Non-Standard Finance. Provident described the move as highly ‘opportunistic’, and they felt the bid does not reflect the company’s true value. The share price of Provident Financial sold-off greatly in 2017, and hasn’t recovered, and Provident feel the bid would be undervalue the firm.

US

Stocks rallied as US-China trade relations are improving. The announcement that the US will delay imposing higher tariffs on Chinese imports has lifted sentiment. In recent weeks, we have heard little about the state of negotiations, but what we have heard has been positive, and the announcement that the increase in tariffs will be deferred wasn’t a huge surprise.    

Kraft Heinz shares are a little lower today as the company is said to be considering selling its Maxwell House coffee division. Last week the company revealed disappointing numbers, and the dividend was cut too, as well as incurring write-downs. The possible sale of Maxwell House would be seen as a part of its disinvestment programme. 

Barrick Gold launched a takeover bid for Newmont Mining. Barrick believes the deal would unlock synergies that exceed $7 billion. The underlying gold market has experienced relatively low volatility since 2013 and the pooling of resources might maximise profits.

FX

GBP/USD has been helped by the weakness in the US dollar. The broad-based sell-off in the greenback has lifted sterling. Brexit continues to dominate the headlines. Donald Tusk, the President of the European Council, said the EU would back extending article 50 if a deal in not reached soon.

EUR/USD has been lifted by the downward move in the US dollar. It was a quiet day in the eurozone in terms of economic announcements.

Commodities

Oil has sold-off after President Trump companied about the oil price being too high via Twitter. The US president claimed the global economy can’t withstand another hike in the oil market. The energy recently hit a three month high, so dealers used the opportunity to take some money off the table.

Gold has been given a boost by the dip in the US dollar. The metal continues to enjoy a strong inverse relationship with the commodity. Gold has been in a strong upward trend since mid-November, and if the move continues it might target the $1,350 area.

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