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Blue chip earnings shrink

The FTSE is trading higher on what is left of the Sino-US trade-deal optimism but this morning’s company results did little to prop the index up. Shares in product testing company Intertek, Ashtead industrial equipment rental group and sports bettor GVC all slipped on evidence of shrinking profits or, in GVC’s case, a loss. Yet the FTSE is up over 0.3%, moving in the same direction as the rest of the European markets and stocks in Asia are feeding off the expected removal of trade tariffs between China and the US. 

Food stock piling and lower non-essential item sales reflect Brexit worries

Brexit is now very much part of the fabric of how consumers live and breathe. Although on the year the level of consumer spending has barely changed, it is up 0.5%, consumers have been holding back on buying non-essential items like clothes or spending on entertainment including hotel stays. However, the love of a good pint is still in play, food buying has increased and there has been more evidence of stock-piling of food and other essential items during February. 

The evidence of slowing economic growth will play a factor at the Bank of England’s next rate setting meeting but Brexit is likely to keep the rate setters’ hands tied until there is a final resolution to Britain’s divorce from Europe. 

The currency market is reflecting this caution with the pound trading barely changed against the euro and marginally weaker against the dollar. Still, sterling remains comfortably above $1.30, the unofficial no-deal Brexit marker.

Oil nudges lower on profit taking

Oil traders took some profits off the table after prices rose nearly 2% on Monday, helped by trade deal optimism and concerns that a shutdown of a Nigerian oil terminal could temporarily disrupt oil exports from this OPEC member. Brent crude prices initially dipped 0.85% but seem to have stabilized. OPEC production cuts over the last few months continue to keep Brent prices at the higher end of the $60-$70 range, at least as long as President Trump doesn’t express his dissatisfaction with higher oil prices, as he did in February.  
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