European equity markets are lower after President Tump announced he wasn’t ‘satisfied’ with how the trade talks with China are going. 

Investors used the remarks as an excuse to exit their equity positions after a strong session yesterday.

Marks and Spencer shares are higher this morning after the firm posted a profit that topped analysts’ estimates. Full-year underlying pre-tax profit dropped by 5.4% to £580.9 million, which exceeded the £573 million that traders were expecting. When you take into account one-off costs, earnings dropped by 61.2% to £66.8 million. The retailer took a hit of £321 million in relation to closing stores, and since many more store closures are planned, costs are expected to rise in the next few years. The clothing division continues to underperform as fourth-quarter like-for-like sales fell by 3.4%, while the consensus estimate was for a decline of 1.3%. Marks and Spencer aims to reduce the floor space allocated to clothing by 5% by years end. The drive to focus more on successful food stores is likely to be costly in the near term, but could be fruitful in the long term.

There is talk that Barclays and Standard Chartered are considering a merger. An activist investor, Edward Bramson of Sherbourne Capital, now owns a 5.4% stake in Barclays, and has been pressuring the bank to trim down its investment and corporate banking divisions. As a way of fending off Mr Bramson’s advances Barclays are considering a tie-up with Asia-focused Standard Chartered. Should the move go ahead, the new group would have a truly global presence, as Barclays has exposure to the UK and the US. Barclays shares are down 0.7% while Standard Chartered shares are up 0.9%.

GBP/USD sold-off after UK inflation slipped from 2.5% to 2.4% - a 13 month low. The core CPI reading dropped to 2.1% from 2.3%, and this underlines the drop in the cost of living.

EUR/USD is under pressure after German and French service sector reports came in below estimates, and showed that growth rates declined on the month.

At 7pm (UK time) the Federal Reserve will release minutes from the meeting earlier this month, where interest rates were kept on hold. Last month the US central bank confirmed they were confident the inflation target would be achieved, but were less optimistic about growth. Traders are pencilling in an interest rate hike next month, but they remain divided about how many more rate hikes we could see beyond June.

We are expecting the Dow Jones to open down 179 points at 24,655 and we are calling the S&P 500 18 points lower at 2706.

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