European gauges are making ground this morning after China and the US began the latest round of trade talks in a phone call between high level officials.
On the agenda are Chinese imports of agricultural products and changes to the country’s economic policies, the relatively softer issues between the two countries. The really contentious ones such as patent rights in China, intellectual property theft and the South China Sea have been held back for a different occasion, allowing the market to build some hope for a resolution and pushing the Shanghai composite up 0.4% and the smaller Shenzhen index 0.8% higher.
On the FTSE, miners and metals companies are making ground helped by an overnight rally in copper prices. Rental equipment maker Ashtead (LON:AHT) is also among the top gainers after the company posted a nearly 20% increase in first half pretax profits. The firm’s stand out performer was its US Sunbelt unit which earned an additional $20 million in revenue in the clean ups after Hurricanes Florence and Michael.
May: under pressure
The two-step forward, one step back of Brexit continues after PM Theresa May postponed a key vote on her Brexit proposal that was supposed to happen today. In her speech to Parliament late Monday she didn’t offer much of an explanation on what will happen next, just that the vote is being deferred because the proposal was very unlikely to pass.
The most contentious issue remains Northern Ireland’s position, something the EU is unwilling to change its stance on. And while for onlookers in Britain it may seem as if Parliament was the main stumbling block to the deal, Brussels is also increasingly digging its heels in over renegotiating the 585-page heavy document currently on the table.
The pound is having a breather this morning after a sharp selloff Monday and is trading up 0.4% against the dollar and 0.2% higher against the euro but this is unlikely to be the end of the volatility we are seeing in the currency markets. Among MPs there is no clear majority forming around any specific idea which means that the Britain continues to hurtle towards a no-deal outcome.
Dollar traders worry about Fed delays
In contrast to the pound, the dollar is sliding against a basket of currencies following a recovery Monday. Currency traders remain concerned that the Federal Reserve might postpone some of its planned rate hikes for later in 2019, which would further affect US bond yields and continue to put a cap on dollar rallies.
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