Financial market research and analysis

Optimism of a possible trade deal between the US and China lifted Wall Street overnight. The improved market sentiment spilled across Asian markets and European bourses are looking follow suit.

The US – China trade talks being extended into a third day is being interpreted by the markets as a sign of progress. Comments coming from both parties continue to indicate that the talks are, so far going “very well”. A deal is likely to still be a long way off, with many twists and turns still to overcome along the way. However, the extension is a step in the right direction, sending a signal that the two sides are in serious negotiations and are working hard to resolve the issues.

Oil rally moves into 8th consecutive day
Trade talk optimism was sending oil higher for yet another session. After a December to forget, oil is riding a positive wave so far this year. Traders are growing increasing hopeful that the two economic powers, US and China will soon bring to an end the ongoing trade war which it is feared will trigger an economic slowdown. Brent rallied 2.2% across Tuesday and was trading over 1% higher early on Wednesday, putting it in line for its 8th straight winning session.

Improving sentiment
Suddenly several of the panic-causing issues that sent markets lower in the final quarter of 2018, appear to be progressing in a more positive manner. The US and China are talking face to face to resolve their trade issues. The Federal Reserve Chair Powell has promised that the Fed will remain flexible over rate hiking and the US economy is strong with job creation at impressive levels. From this angle a boost in sentiment and increased appetite for risk is understandable.

Brexit withdrawal agreement back to Parliament
The pound could see an increase in volatility as the Brexit withdrawal bill returns to Parliament to be debated for 4 days. It will be voted on Tuesday 15th January. Whether Theresa May’s deal will be approved in Parliament remains unclear. Theresa May suffered, on Tuesday, what has been promised will be the first of many defeats from opponents of a no deal Brexit. Whilst many MP’s are not in favour of Theresa May’s deal, they are not in favour of crashing out of the EU without a deal either. 20 senior Conservatives voted against Theresa May in favour of tactics to prevent a no deal scenario. If a no deal is increasingly ruled out by Parliament the pound could find itself supported moving towards the vote, even as uncertainty of what comes next remains high.

The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 79% of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.