Dealers have high hopes for the US-China trade talks, and there were some optimistic words from President Trump, and that added to the bullish move. 

Europe

The negotiations will extend into this evening, and given the lack of negative macroeconomic news, traders are content to add to the bounce back that began in late December. The feel good factor surrounding China has pushed up the share price of HSBC, given the bank does a large portion of its business in the Far East. The stock is contributing the most to the FTSE 100 in terms of index points on account of its large weighting in the index.

Greene King posted solid figures, as the group revealed a 10.9% increase in like-for-like (LFL) sales over the past two weeks, and Christmas Day was a record in terms of sales. The healthy figures were well received as the updates from the pub sector recently have been underwhelming. The firm still plans to shut between 100 and 110 underperforming pubs, and open nine new ones. The group will keep an eye on costs too as higher wages and food inflation are creeping up. The stock has hit a six month high, and if the upward move continues, it might target 600p.

Morrisons revealed a 0.6% rise in same-store sales for the nine weeks until early January, while equity analysts were expecting growth to be between zero and 0.5%. The retailer posted a 2.1% rise in the same period last year, and today’s update confirms a slowing of the growth rate. Total sales growth was 3.6%, and the wholesale division performed well too. The retailer confirmed that it was the fourth consecutive Christmas that (LFL) sales increased. The supermarket is ‘listening’ and ‘responding’ to customers, and that has helped lift customer satisfaction. The stock has declined since August, and if the bearish move continues it might target 203p.

UBS raised Ashtead to neutral to sell and hiked their price target to 1,800p, from 1,720p.

US

Equity markets have rallied as traders are optimistic about the US-China trade talks. President Trump tweeted that the talks were going well, and that added to the upward move. The US president boasted about how well the US stock market was doing in most of 2018, but the bearish move in recent months, may have encouraged him to take softer stance in relation to trade.  

Union Pacific shares have rallied after the group announced that Jim Vena will take over as chief operating officer. Mr Vena, joins from a rival firm, Canadian National. The company is performing well, and it plans to keep trimming its headcount as earnings growth cooled due to congestion problems. The stock gapped higher today, and if the positive move continues, it might target the $160.00 region.

FX

EUR/USD is lower on the day after Germany issued its latest disappointing economic update. Industrial output dropped by 1.9% in November, and the consensus estimate was for an increase of 0.3%, and the previous report was revised down from -0.5% to -0.8%. Last week’s manufacturing and services PMI reports were disappointing, and this paints a gloomy picture of the economy.

GBP/USD has suffered on account of the firmer US dollar. The UK posted respectable house price data, according to Halifax, UK average house prices jumped by 2.2% in December, which topped the 0.2% forecast.

USD/CAD is largely unchanged on the day even though the Canadian trade deficit widened in November to C$2.06 billion, from C$0.85 billion in October. 

Commodities

Gold is in the red due to the rebound in the US dollar. The metal’s strong inverse relationship with the US dollar continues. The greenback has edged up, but the Federal Reserve appear to be a little on the dovish side, and some traders aren’t too fearful of higher interest rates in the near-term. If gold’s bullish run continues it might target $1,300.  

Oil has rallied on the hope the US and China will reach a breakthrough in the trade talks. Saudi Arabia, the de-facto head of OPEC, is reported to be planning export cuts of roughly 7.1 million barrels by the end of the month, and that is playing into the upward move too.

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