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Alliance News

LONDON MARKET EARLY CALL: Higher Call On Lingering Trade Hopes

Fri, 11th Jan 2019 07:00

LONDON (Alliance News) - Stock prices in London are seen opening in the green on Friday, despite the US and China not announcing any specific progress from trade talks this week.

"Sentiment is greatly improved, and trade talk optimism has helped boost risk appetite across the week," said London Capital Group's Jasper Lawler.

"However, traders are acutely aware there is a lack of anything concrete between the US and China. The reality is whilst both sides are working hard for a deal, there is a huge amount of ground to cover. Any deal right now would need to be extremely far reaching," he continued.

"The market wants to see more, which could stall the rally quickly."

IG futures indicate the FTSE 100 index is to open 26.5 points higher at 6,953.80. The blue chip index closed up 36.24 points, or 0.5%, at 6,942.87.

US Federal Reserve Chairman Jerome Powell predicted no recession in 2019 on Thursday, and said the US central bank will be patient in determining when to hike interest rates.

Fed Vice Chairman Richard Clarida also said the Fed could afford to take a wait-and-see stance on interest rates if headwinds to the economy from financial markets or global growth prove persistent.

St Louis Federal Reserve Bank President James Bullard, a member of the Fed's Open Market Committee, likewise took a dovish tone, saying he will only support further hikes if inflation expectations pick up.

In local news, UK Prime Minister Theresa May has reached out to union leaders as she makes an 11th-hour attempt to reach out to her political opponents to get her Brexit deal through the Commons.

Downing Street said the prime minister had "constructive" phone conversations about her Brexit deal with trade union leader Len McCluskey of Unite, a Brexit supporter and close confidant of Labour leader Jeremy Corbyn, as well as Tim Roache of the GMB.

Number 10 also confirmed ministers would "consider very seriously" moves by Labour members of Parliament to safeguard workers' rights after Brexit in an attempt to win support for her deal, if the backbench amendment was selected by the Speaker.

The amendment would keep EU rules on pay and conditions, health and safety issues, and environmental standards.

However senior opposition figures rowed back against the overtures, saying it was too little, too late.

Sterling was quoted at USD1.2755 early Friday, lower compared to USD1.2775 at the close Thursday.

Back in the US, President Donald Trump travelled Thursday to Texas for a visit to the US-Mexico border as he intensifies his push for a wall, a demand the opposition Democrats in Congress flat-out reject.

The stalemate over funding the wall has resulted in a partial government shutdown that will reach day 21 on Friday, tying a record for the longest government shutdown in US history.

Trump held a round-table discussion with border guards, local politicians and fellow Republicans who testified to the need for building a wall or barrier to stop illegal immigration, human trafficking and the flow of illicit drugs.

"It's clearly a crisis," Trump said. "A lot of the crime in our country is [committed] by people who are coming through right here."

He said again Thursday he might declare a national emergency in order to circumvent Democrats in Congress who are blocking funding for a wall.

"I'm not prepared to do that yet, but if I have to do that, I will," he added.

In the US on Thursday, Wall Street ended in the green, with the Dow Jones Industrial Average closing 0.5% higher, the S&P 500 also up 0.5%, and the Nasdaq Composite ending up 0.4%.

In Asia on Friday, the Japanese Nikkei 225 index ended down 1.0%. In China, the Shanghai Composite is up 0.8%, while the Hang Seng index in Hong Kong is 0.4% higher.

A quiet UK corporate calendar on Friday has trading statements from online electrical goods retailer AO World and from builders' merchant Grafton Group.

The economic events calendar on Friday has UK industrial and manufacturing figures at 0930 GMT and US inflation readings at 1330 GMT. In addition, the US monthly budget statement for December is set to be released at 1900 GMT.

By George Collard; georgecollard@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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