Stocks are largely in positive territory as the fears surrounding trade tensions have cooled.

Europe

It now appears the US are taking a less aggressive stance with China regarding investment, and traders are using this as an opportunity to go bargain hunting.

Inmarsat shares are in the red after Eutelsat confirmed they are no longer interested in the company. Only yesterday Eutelsat confirmed they were contemplating making an offer for Inmarsat, but today they performed a U-turn. Earlier this month, Inmarsat knocked back a preliminary bid from EchoStar, and the US company will have until early July to make a formal offer for the London-listed firm. Inmarsat shares have been pushing higher since late May, and if they hold above their 200-day moving average at 482p, the outlook appears positive.

Sainsbury’s were the underperformer in the 12 weeks until mid-June according to Kantar. The research firm announced that Sainsbury’s sales slipped by 0.2% in the period, while Tesco, Asda and Morrisons all saw sales rise by between 1.4% and 1.9%. Aldi and Lidl saw sales jump by 8.2% and 10% respectively. It is hardly a surprise that the German deep-discount supermarkets are racking up the biggest percentage gains.

Carpetright rolled out full-year figures that were broadly in line with estimates. Revenue fell by 3% to £443.8 million and the consensus estimate was for £450.85 million. The group confirmed an underlying pre-tax loss of £8.7 million, following April’s announcement that it expected to register a loss of between £7 million and £9 million. The firm will close 81 stores as a part of the company voluntary arrangement (CVA). Trading remains subdued, and the restructuring has made matters worse. Carpetright has its work cut out, but the recovery process is likely to be timely.

US

Equity benchmarks are higher this afternoon as Washington DC has softened its attitude towards Chinese investment. The situation is far from resolved, but the less aggressive position from the Trump administration has paved the way for buyers to wade in. Trade disputes are rarely resolved quickly, and seldom run smoothly. The decline in tensions has encouraged some buying, but given the moves in the past two weeks, the bullish sentiment may not last long.  

US house prices cooled a little according to the Case Schiller house price index report. On a monthly basis, house prices rose by 0.2% in April, while economists were expecting a reading of 0.4%. The March report was revised down to 0.4% from 0.5%.

FX

The US dollar index has returned to bullish form after losing ground in recent sessions. The greenback hit an 11-month high last week and this move might be the resumption of the wider trend.

GBP/USD is weaker on account of the firmer greenback. This morning we heard from Jonathan Haskel and Ian McCafferty. Mr Haskel, a prospective policymaker for the Bank of England (BoE), expects wage pressure to be relatively weak. Mr McCaffery is an existing policymaker at the BoE, and he believes that the transition to Brexit is likely to curtail productivity growth.

EUR/USD is in the red on the back of the rally in the US dollar. There were no major economic announcements from the eurozone today, and the currency remains in the same downward trend that began in April.

Commodities

Gold has fallen to a fresh six-month low on the back of the bounce back in the US dollar. The metal couldn’t muster a rally yesterday, when the greenback was softer and equities were lower, and now it has moved a leg lower. Gold has been in decline since April, and if the bearish move continues it might target $1,250.

WTI and Brent Crude have come under pressure recently after it was reported that Saudi Arabia are planning to ramp up oil production in July to a record level. Going into the Opec meeting last week, the Saudi’s were keen to boost output, and now they are backing up their previous statements.   

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