Equities lacked direction in the European session, as investors sat on the side-lines waiting for developments regarding the US – Sino trade talks. With the 13th round of talks due to kick of imminently and contradicting headlines leading up to the start, its anyone’s guess as to whether the two powers will be able to hammer out a deal.

Whilst hopes of a broad, far reaching deal are as good as dead, optimism surrounding a limited deal still exists. This would still be a significant improvement on the current uncertain situation; in the eyes of the market this would still be a win.

The FTSE was trading ahead of its peers with miners leading the way, whilst Brexit battered house builders dominated the lower reaches. Brexit uncertainty has weighed heavily on the UK housing market, with house prices recording the slowest growth in 6 years. A no deal Brexit would hit housing demand further. However, an extension to Brexit and more of the same uncertainty would also be damaging to the sector.

Pound holds steady vs dollar

The pound gave up earlier gains and is heading back towards the flatline. As Prime Minister Boris Johnson meets with Irish counterpart Leo Varadkar, there is a real sense that this last chance saloon. Investors are watching closely to see if a deal can be pulled from these final talks. The fact that sterling remains above $1.20 suggests that pound investors are still optimistic that the UK will avoid a no deal Brexit. At these levels pound investors are pricing in an extension, rather than a Brexit deal or no deal Brexit.

Oil moves quietly higher

Oil was on the rise for a second straight day, putting it on track for a 1% increase across the week so far. Turkey’s military invasion in Syria plus trade deal optimism overshadowed rising crude inventories. Traders are now poised awaiting further trade headlines. Any form of a deal between the world’s largest economies could help lift demand prospects going forward. Any signs that the talks are falling apart before they really get going could see oil drop sharply lower.

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