FTSE higher but European markets mixed

The FTSE is higher this morning but European markets are more of a mixed bag following a series of profit warnings from major US companies and Californian utility PG&E filing for bankruptcy protection. Fresh concerns over the US-China trade dispute are hitting the DAX, big European car makers and luxury brands.

Little hope of trade dispute resolution Wednesday

The relationship between the US and China is about to become more complicated again after the US brought criminal charges against telecommunications maker Huawei and the company’s chief financial officer Meng Wanzhou who is also the daughter of Huawei’s founder. The two countries were about to start trade talks in Washington on Wednesday but with China fiercely opposing the Huawei criminal case and arguing that the US is using it to suppress Chinese companies the prospect of a resolution to the talks is quickly fading. 

Instead what the market could be facing now is that the US will double its tariffs on some Chinese imports when the current truce period expires in March. Neither the stock markets nor some of the currency markets are taking this well: Asian stocks, German exporters to China and the dollar are being hit the most but the renewed frictions have been good news for the yen which is attracting safe haven buying.
  
Tesco shares flat after job cuts

Following a quick selloff after the market opened this morning Tesco shares are trading flat as the company revealed it would cut 9,000 jobs across the country. The cost cutting exercise will mainly consist of reorganising the chain’s meat, fish and deli counters and stopping its offering of hot food. The retailer’s shares have been rising since early January after the company posted the best Christmas trading numbers in almost ten years but the company’s growth remains too low-key from investors’ perspective. Christmas provided a brief respite for the UK supermarket chains which have been under pressure from falling sales, partially caused by Brexit concerns and partially by lower income.
 
Pound flat ahead of Brexit vote Tuesday

Sterling is almost flat lining against the dollar and the euro ahead of a key vote on Brexit Tuesday. The Prime Minister’s new proposal has included suggestions from across the benches but it remains to be seen whether they are big enough to give the deal a green light, particularly given how many MPs voted against it only  a couple of weeks ago.