European stocks are trending higher, helped by a set of strong banking results. A slowdown in Asian stock markets caused by more Chinese data showing a decline in manufacturing was mostly shrugged off here as investors focused on positive numbers from BBVA (MC:BBVA), Caixabank (LON:0ILK) and a production update from miner and trader Glencore (LON:GLEN).
US-China trade talks end without a resolution
This week’s round of Sino-US trade talks is now done and dusted but the two sides have nothing much to show for them. Although both top negotiators made positive noises after the talks there has been little concrete evidence of any concessions. If anything, President Trump’s comment that he will have to meet “with my friend” China’s Xi Jinping in order to make progress confirms that conclusion.
There is not much time left to reach an agreement; a truce struck by the two presidents runs out on 1 March. Past that deadline there is a good chance that the US will go ahead with plans to double its tariffs on a portion of China’s exports. China's economy and the stock markets are already showing signs of a slowdown – the Shanghai Composite Index is down 26% on the year – but the mutual tariffs are also eroding the profits of US tech producers and European car and luxury goods makers.
European banks report strong profits
Across Europe trading has been dominated by bank results with Spain’s Banco Bilbao Vizcaya Argentaria turning in much higher fourth quarter profits than in the same period last year. The bank has dug itself out of a financial hole caused by last year’s impairment charges mainly through the sale of its assets in Chile.
Deutsche Bank (DE:DBKGn) had a more mixed offering. While the bank reported the first increase in net profits since 2014, profits still remained considerably below analysts’ expectations while revenues declined by 2%.
In a lull for Brexit news and post the US-China talks, currency markets are slightly subdued this morning with the dollar, euro and the pound trading nearly flat against one another. The Bank of England is due to meet next week and although inflationary pressures are on the rise the bank is likely to hold back on any rate decisions while the future of Brexit remains opaque.
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