European markets higher on trade deal news
Fiona Cincotta March 4, 2019 10:10 AM
The prospect of a quick end to the nearly year-long global trade war is helping the FTSE start the week on a higher note and boosting European markets
The prospect of a quick end to the nearly year-long global trade war is helping the FTSE start the week on a higher note and boosting European markets. US futures are also indicating a higher open as the US and China are nudging closer to defining a new trade deal which could see most of the current import restrictions removed and almost all import tariffs removed.
The deal could still face hurdles as some US industries may feel that the terms are too favourable but for a lot of exporters a signed deal will bring immense relief, most notably chemicals, car production and agriculture. China is committing to speed up the removal of foreign-ownership limitations on car ventures and reducing tariffs on imported vehicles to below the current auto tariff of 15. A final deal should be ready for the Trump-XI Jinping summit at the end of March.
Up in the air
After months of negative news for European airlines, which has seen the demise of budget airlines Cobalt and Primera Air and the Slovenian national carrier Adria Airways teetering on the brink of bankruptcy, for those airlines that managed to remain in business the outlook seems to be improving. Overcapacity, higher oil prices, strikes and political events like Brexit have all left their mark but the issues, apart from Brexit, are slowly being resolved. Oil prices seem to have settled in the mid $60 range rather than closer to $100/bbl like a year ago and the collapse of several smaller carriers has channeled capacity towards the remaining players in the market.
The numbers provided Monday by budget carriers Ryanair and Wizz Air are starting to indicate a new trend with both companies showing double digit annual increases in passenger figures and their load factors rising to 96% and 94.2%, respectively. The share price has yet to reflect the improvement – Ryanair shares lost some ground this morning as did International Airline Group and Easyjet.
After a tumultuous week on the Brexit front politicians seem to be taking time to regroup before the next set of political moves are played out, with the next critical date being March 12 when the upcoming Brexit vote will take place. In the meantime the currency market seems less volatile and the pound is firming against the euro and the dollar.
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