US China progress lifts European markets
Fiona Cincotta February 21, 2019 9:56 AM
Attempts to end the months-long trade tit-for-tat between the US and China may finally have yielded some progress. Negotiators from the two sides are reportedly in the process of drawing up memorandums of understanding to cover the thorniest of talk issues such as forced technology transfer and cyber theft, intellectual property rights, currency issues and agriculture trade.
Attempts to end the months-long trade tit-for-tat between the US and China may finally have yielded some progress. Negotiators from the two sides are reportedly in the process of drawing up memorandums of understanding to cover the thorniest of talk issues such as forced technology transfer and cyber theft, intellectual property rights, currency issues and agriculture trade. The potential end to the trade war has boosted Asian markets and helped Wall Street close higher, but the picture in Europe was more mixed. While the DAX made fresh ground on the news, particularly because German car makers are set to benefit from a resolution of the trade dispute, the FTSE and the CAC headed south.
Centrica warning weighs on FTSE
Centrica was a major weight on the FTSE with an 8.3% decline in share price, slightly undeserved as the company reported a sharp increase in operating profit and a dividend payout of 12 pence a share. But the energy provider also warned of lower profits in 2019 because of a price cap on energy tariffs brought in by Ofgem in January.
Sterling perks up as May starts three-day Brussels talks
The pound is back above $1.308 on signals that Prime Minister Theresa May could achieve some success in her Brexit talks in Brussels today. A three-day negotiation in Brussels started off with a brief meeting between May and EC president Jean-Claude Juncker and an encouraging press statement and was followed up by a positive comment from Chancellor Phillip Hammond saying the PM could present a revised Brexit deal as early as next week.
While Theresa May is busy negotiating in Brussels, domestic politics is splintering more and more making it fairly unlikely that any Brexit proposal will get a green light from Parliament. For the time being sterling traders are working with a positive outcome scenario and the pound is trading up 0.24% against the dollar and 0.19% higher against the euro. But if May’s next Brexit proposal is not approved by MPs the possible outcomes will narrow to either postponing the Brexit deadline or leaving the EU without a deal, neither of which will be supportive of the pound.
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