The FTSE 100 had a strong start to the day, but due to declines in consumer and industrial stocks, the British equity index is just about in positive territory. 

Europe

Eurozone equity markets have managed to hang onto most of the gains that were made on the back of optimism over US-China trade talks. Delegates from the US and China are in talks in Beijing, and sentiment is buoyant. 

TUI shares are in the red after the company registered a first-quarter net loss of €111.9 million, and that compares with a loss of €68.3 million in the same period last year. Turnover for the first three months of the year ticked up by 4.4%. Like its competitors, TUI blamed the unusually warm summer in Europe and the relatively weak pound for the loss. The company said its growth strategy is still intact, and the company anticipates earnings to be largely stable in 2019. The stock has fallen to its lowest level in over two years, and if the bearish move continues it might target the 800p area.

Debenhams confirmed they have secured a £40 million loan facility for 12 months. The retailer issued a string of profit warnings last year, and this new lending facility will act as a lifeline in the medium-term. The stock has rallied as the access to funds will give the group some much needed breathing space. Credit lines are all well and good, but Debenhams needs to undergo major restructuring to ensure its long-term survival.

Spire Healthcare were downgraded by Credit Suisse to underperform from neutral, and the bank slashed their price target to 85p from 170p.

CYBG declared it will enter into a joint venture with salary finance .The move will cost CYBG £500,000 and the fintech platform will complement the group’s lending business. The London-listed bank is keen to keep up with industry trends as 40% of British clients are availing of fintech services.

US

The Dow Jones and S&P 500 are higher this afternoon as US politicians reach an agreement in order to prevent another shutdown of the US government. President Trump is still undecided on the deal, but at least it is a step in the right direction. The US-China trade saga continues, and US trade representative, Robert Lighthizer and, US treasury secretary, Steven Mnuchin have arrived in China, and investors are optimistic. Equity traders are viewing the arrival of the two influential negotiators as a boost for the talks.  

Amazon shares are a little higher today after the company announced it is acquiring Eero, for an undisclosed amount. The decision by the internet giant is seen as a sign they are determined to expand into smart home technology. Amazon have disrupted the retail industry, they are moving into the healthcare sector ,and now this, and it is clear they want to imbed themselves into every part of your life. The group is moving closer and closer to be becoming lifestyle company.

The December JOLTS report was 7.33 million, which easily topped the 6.9 million that economists were expecting, and which shows the strength of the US jobs market. 

FX

In early trading the US dollar index reached its highest level since mid-December, but it has since retreated a little. The greenback has enjoyed a positive run recently, partially because of the slightly dovish language from other central banks.

GBP/USD and EUR/USD saw small volatility today as there were no major economic announcements from Europe. The uncertainty and lack of clarity around Brexit still persists and given that the clocking is running out in relation to coming to an agreement to avoid a no-deal Brexit scenario, the pound might find it difficult to attract buyers.

Commodities

Gold had edged up on the back of the dip in the US dollar. The metal has been pushing higher since mid-November and seeing as the Federal Reserve seem to be taking a more neutral stance these days, the bullish move might continue. If gold breaks above $1,326 it might bring the $1,335 area into play.

Oil is higher after Saudi Arabia announced they plan to reduce oil production to close to 9.8 million barrels per day in March, and that is considerably deeper than the cut they promised. At the back end of last year, the country said production would be reduced to 10.3 million barrels per day, and they now they intend to greatly undercut that.

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