Slowing economy overshadows trade talks progress

European markets are trading just above the flat line with no indication of whether they will be able to remain in the black for the rest of the day as the optimism over progress in the Sino-US trade talks is being overshadowed by concerns about the global economy. In London, metals and miners are leading the way higher helped by a firmer copper price which has risen over 10% in the last month.  Education group Pearson, the former owner of the FT, is also among the top FTSE gainers after it released a plan to restructure its pension liabilities.

Will weaker German economy force the ECB’s hand?

A series of relatively weak German economic indicators are keeping the DAX close to unchanged this morning – the PMI numbers Thursday showed clearly that the country’s manufacturing is now shrinking while this morning’s data provided proof that Europe’s biggest economy is skidding on the brink of recession. The European Central Bank is keeping a concerned eye on the state of Germany’s economic growth and has already said in January that the risk to the whole Eurozone has gone from broadly balanced to downside risk. 

One of the ECB’s chief economists has indicated that at its next meeting in March the bank will deliberate on whether to offer a round of cheap loans only months after it stopped the bond buying programme that has been in place since the last financial crisis. Despite the concerns the euro is holding up, trading 0.1% higher against the dollar and 0.32% against sterling.

Pound holds above $1.3 but inches lower

The pound has lost some ground against the dollar but remains comfortably above the $1.3 level which has now become the informal gauge of the degree of Brexit stress in the country. The defections from the Labour and Tory parties have come to a temporary halt while the PM is still in Brussels trying to renegotiate some of the finer points surrounding the Irish border issues. The political temperature is likely to start rising next week again ahead of the next significant Brexit vote in Parliament and we could easily see more MPs leaving their parties in a last bid attempt to avoid both the current proposal and a no-deal Brexit.