FTSE higher on China US talk reprieve

The FTSE and most European gauges are firming up this morning, helped by a good session in Asia and a positive close on Wall Street Tuesday. President Trump seems for the time being to have softened his stance on the deadline for a deal on the Sino-US trade talks, infusing global markets with a light helping of optimism. The 1 March deadline initially put in place by Trump and his Chinese counterpart in December now no longer seems carved in stone, instead the two presidents could meet after China’s annual congress on 5 March.

Sainsbury loses 15%

Sainsbury’s shares are being pummeled this morning after the UK’s competition regulator said it might block the company’s merger with Asda. The Competition and Markets Authority is concerned that the merger will result in higher prices, not only in the chains’ food stores but also across the companies’ network of petrol stations. The options the two supermarket giants were given include selling a number of stores or selling one of the two main brands, neither of which the two companies seem keen to embrace. The CMA’s blow to the deal resulted in an initial 15% loss for Sainsbury shares although they are now starting to recover, while Morrison fell 4.38%. Tesco’s managed to trade sideways, keeping just above the flat line.

Europe losing patience over Brexit

“I am losing my time with this Brexit.” Those were the words of European Commission president Jean-Claude Juncker ahead of a next round of talks with Theresa May in which the PM will try to renegotiate some of the Irish border issues. The PM is hoping to come home with a new deal ahead of the next Brexit vote in Parliament on 27 February. But Juncker’s comments provide evidence that European politicians are losing patience with Britain’s Brexit and are becoming less willing to accommodate any changes to the existing proposal. This, combined with the rising resistance from the Labour party rebels, does not promise that the vote will actually pass next week, making a hard Brexit more likely. However, the currency market seems to disagree, as sterling is trading back above $1.3, although this morning it lost 32 pips. The $1.3 level has recently taken on the role of an informal “hard Brexit level”, weakening below it every time the markets read the political situation as moving towards a 'no solution' result ahead of the end of March.

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.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.