Positive start to Monday trading

European indices are trading gently higher as markets have yet to wake up to the fact that a new political battlefront is about to open up.

European indices are trading gently higher as markets have yet to wake up to the fact that a new political battlefront is about to open up.

Over the weekend President Trump threatened to pull out of a key 1980s nuclear treaty with Russia over the country’s violation of the pact, just ahead of a meeting on Monday between the US National Security Advisor John Bolton and Russia’s President. It remains to be seen what the reaction from Moscow will be as Putin is not renowned for taking threats lying down. Russia is the world’s largest producer of oil and is Europe’s main source of gas – used both to generate electricity and heating. The oil market has yet to digest the latest developments and for the time being Brent crude is trading only slightly higher at just above $80.

China support package boosts stocks

China’s major stock markets received an adrenaline shot as the country prepares for major tax and fee cuts next year that could potentially be worth more than 1% of its GDP. In a rare sight the Shanghai Composite jumped 4.6% and the Shenzhen index soared 5.4% as investors anticipated that the cuts mainly aimed at private consumers will boost retail spending and prop up the country’s economy.

Is 95% of a deal enough?

The pound is at sea as PM Theresa May prepares to tell Parliament that a Brexit deal is 95% in place. The remaining 5% consists of the contentious Irish border issue and has been the hardest part to resolve. With resolution of the issue seemingly not any closer than last week sterling is weakening against the dollar but not as much as against the euro. The common currency is showing surprising resilience in the face of Italy’s looming conflict with the EU over its budget and renewed weakening of Italian bond market.

Ryanair profits drop

Ryanair shares are on the rise this morning, up almost 5%, despite the company’s second-quarter net profit declining 6%. The budget airline faced off against German pilot and crew unions for the best part of this summer and like its peers had to handle rising fuel costs and weaker demand. It is unclear what is propping up the shares at present except that the company is due to receive a British license to operate domestic U.K. routes before year-end. When that happens, watch out for the reaction in EasyJet and British Airways parent IAG group.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.