Having seen a decent rebound yesterday on the back of the 90 day waiver to Huawei to continue supplying software updates and hardware maintenance to US and other companies, equities have taken a bit of a pause in Asia on reports that the US might consider broadening the scope of its blacklisting of Chinese companies to surveillance companies.

As a result, Chinese tech companies have come under pressure with Hikvision and Zheilang Dahua Technology shares falling back.

European markets have opened cautiously mixed, with the FTSE 100 outperforming due to the weakness of the pound as it continues to slide, as MPs lined up to rubbish Prime Minister May’s new Brexit withdrawal agreement proposal.

Packaging companies Mondi and Smurfit Kappa are among the early big movers higher on the FTSE 100.

On the results front, Marks & Spencer's share price has slipped this morning after the company reported a decline in full-year pre-tax profits of 9.9%, coming in at £523.2m, though the numbers are slightly better than expected. Profit after tax actually showed an increase from last year, coming in at £37.3m, an increase of 28%.

On the actual internals the company gave some details on its proposed joint venture with Ocado, saying it would be looking to raise £601.3m in a one for five rights issue to help integrate and improve its food offering.

Royal Mail’s latest full-year numbers showed a familiar pattern of rising revenues, a struggling letters division, and a parcels division that is managing to hold its own in a tough retail environment. Management also announced a change to its dividend policy, reducing next year’s dividend to a basic 15p per share, compared to this year’s total dividend of 25p. This has helped send Royal Mail’s share price to new record lows.

Bovis Homes' latest trading update has shown that year-to-date trading is well on track to deliver on its full year estimates. The company says sales rates have improved, up 17% on the previous year, though that is probably down to this winter being milder than last year, when prospective house buyers had to cope with the freezing weather, which would have cut down on people’s ability to travel to viewings.

The brief move higher in sterling yesterday in the wake of the prime minister’s pledge to add a confirmatory referendum to her withdrawal agreement turned out to be yet another false dawn. If anything it appears to have made it much less likely that the deal will pass at the fourth attempt. Numerous MPs who might have voted for it have already said they won’t, and the calls for her to go have once again become that much louder.  Once again Prime Minister May’s attempt to pass off her repackaged Brexit deal as something bold and new hasn’t borne up to scrutiny. It’s like respraying a battered old car, and trying to pretend it’s a new one. As soon as you drive off in it you quickly discover it’s the same old banger.   

US markets look set to open slightly lower this morning over concern about a possible widening of scope by the US of Chinese companies on a blacklist.

With the latest Fed minutes due out later today it was interesting to note that St. Louis Fed President James Bullard make the argument that the FOMC may have overdone it when they hiked rates in December. While he was careful to state that this didn’t mean he was looking to reduce rates right now it is perhaps interesting to note that this may well be an attempt to prepare the ground for a possible move lower over the next 12 months.

Today’s Fed minutes will also be noteworthy in terms of adding colour to the debate about future FOMC policy expectations. Much has been made of the use of the word “transitory” in recent discussions over its use in the context of recent comments from Fed chairman Jay Powell. The lack of inflationary pressure has raised expectations that we might see the Fed lean into talk of possible rate cuts, but with wage growth at 3.4% and the jobs market still robust, there has been a sense that markets might be getting ahead of themselves. This more than anything makes the comments earlier today by James Bullard much more interesting in their context.

 

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