Asia markets underwent a strongly positive session this morning, following on from a strong showing in Europe over rising optimism about progress in the current trade discussions taking place between US and Chinese negotiators, after China offered to cut tariffs on auto imports back to 15%, from 40%.

A slightly more conciliatory tone from President Trump also helped when he suggested that he might intervene in the case of Huawei CFO Men Wanzhou if it could help smooth out the path to some form of deal.

While this could be construed as a welcome intervention it is not immediately obvious if the US President would be able to intervene in what is essentially a Justice Department investigation into contravening Iranian sanctions.

In any case European markets have picked up where they left off yesterday opening higher, led by the usual suspects of basic resource stocks.

Rolls Royce shares are sitting on top of the FTSE100 this morning after reporting full year profit in the upper half of its guidance range, of £350m to £550m. The company said it expected to deliver 500 large engines to its customers in 2018, citing supply chain challenges. The company also said it expected to complete the disposal of its marine operation by the end of Q1 2019 releasing proceeds of £350m to £400m.

It looks like another shocker of a day for UK retail as Inditex, Superdry and Dixons Carphone shares have slumped sharply in opening trade.

Inditex shares have fallen today after reporting weak sales for the third quarter, as the Zara owner resisted the pressure to reduce prices in order to shift its inventory. This has raised concerns that the company may struggle to hit its full year profit forecasts.

Superdry shares had already undergone a disappointing day yesterday after a negative broker note from brokers Berenberg, who downgraded their estimates for 2019-2021 saying that the company’s reliance on winter clothing and the poor performance from Primark augurs badly for a business that has already announced a profits warning this year, when they downgraded profit expectations by £10m. Given that the share price is already down 70% year to date, today’s first half numbers had an extremely low bar to overcome in terms of expectations, and have failed to overcome that.

First half pre-tax profits came in at £12.9m, down 49% on the same period last year. Revenues rose 3.1% to £414.6m, while the company maintained its full year profit outlook in the £55m to £70m range. The company also announced an interim dividend of 9.3p per share, somewhat cold comfort to its shareholders who have seen big declines this year, while blaming the milder start to winter in the last two months for the underperformance, though the company did report good sales in Black Friday week.

Dixons Carphone also reported its latest first half numbers, swinging to a £440m pre-tax loss after setting aside £500m of charges relating to its mobile phone business. The company also said it expects to set aside a further £100m in exceptional costs with respect to a data breach.

On the plus side revenues were up 2% while like for like showed an improvement of 4%.

“Clowns to the left of me, jokers to the right, here I am stuck in the middle with you”.

If ever a song or lyric had the capacity to encapsulate the mood of our times, this one fits the current state of UK politics perfectly, as most people in the UK yearn for a solution to the partisan politics playing out on both sides of the House of Commons with respect to Brexit. While politicians in Westminster appear to think it’s some form of political game, the gridlock is already starting to hit consumer confidence.

Today the Brexit saga has taken another twist as the “will they, won’t they” saga of whether Conservative Brexiters had the votes to force a vote of no confidence in Prime Minister Theresa May, let alone coalesce around a single candidate to replace her, continued with confirmation that the 48 letters have finally gone in, sending the pound briefly to a new 20 month low against the US dollar, as financial markets strive to make sense of what might happen next.

The vote is expected to take place this evening, however it is still not clear whether the rebels have the 158 votes needed to put in place a replacement. What is likely to be more interesting is who stands against her. If May wins the resulting vote later today, then the Conservative party rebels will have shot their bolt.

In any case tonight’s vote doesn’t change the binary choice facing MP’s between May’s deal and any other alternative, and in a perverse way tonight’s vote can be seen as a good thing as it will lance a boil that has been festering for a few months now.

The unfolding political uncertainty might not be as high if we had an anyway coherent opposition, however even here sadly that is lacking which only adds to the overall feelings of uncertainty facing businesses across the UK.

In a sign that “no confidence” votes are contagious the French parliament is also set to debate a confidence motion tomorrow.

US markets look set to recover from their late sell off last night and open higher as the China optimism trickles back from the Asia and European sessions this morning.

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