FTSE propped up by Trump’s trade olive branch

Taking into account the sharp drop in the DJIA and the Nasdaq at the close of trade yesterday the FTSE was set to open lower this morning but President Trump’s softening stance on Huawei and more positive comments on the US-China trade negotiations helped the London index move higher.

Trump repeated his view that the Chinese technology company is dangerous but said that US complaints against the firm could be resolved as part of the US-China trade negotiations. He was also fairly optimistic about the prospect of the trade talks coming to a conclusion soon, although it is not clear when, given that the next round has not even been scheduled yet.

A mixture companies from different sectors are trading higher but most of the volume is flowing through bank and insurance shares and Vodafone.

Sterling firms as politics dominates

European elections are over in Britain but will be going on for another three days in Europe with the Czech Republic voting Saturday and France and Germany on Sunday. The final results due to be released on Sunday will shed some clarity of where British voters really stand on Brexit. 

Later today the Prime Minister is due to set the date for her departure and thus open up the contest for the next incumbent of 10 Downing Street. The currency market is deceptively stable for the moment in the calm before the storm that will be the Conservative leadership battle. Sterling is trading 0.15% higher against the dollar in a relatively narrow channel but could face far more volatility over the next few trading days. 

In the more medium picture, it is at its lowest since the beginning of the year and lower then at several points this spring when the possibility of a hard Brexit was rocking the market.

Oil drops below $70

An expected rise in US crude stocks is pulling oil prices lower despite an ongoing tightness in the global market caused by sanctions on Venezuela and Iran. But although the US crude stocks reflect a US-specific situation where vigorous domestic supply caused prices to slip to $58, Brent Crude also followed suit and has lost more than $2 since the stock data was released. 

For the moment the state of the US-China trade dispute seems to be one of the dominant factors affecting the oil price, and any progress in talks could see oil prices recover.

Mothercare

This result from Mothercare was never going to be pretty but at least the situation doesn't appear to have gotten much worse.

Management has been able to beat their cost cutting guidance and the company's debt pile has shrunk substantially.

The big question now is whether all that cost cutting will hobble Mothercare's ability to refresh its tired old brand.

Today's update will certainly inspire a pinch of optimism, but Mothercare remains a troubled business with an uncertain future. Increasing competition from supermarket chains hasn't gone away and consumer confidence remains fragile.

Investors will want to see some big improvement on the revenue side in the current year, now that the store closure programme is complete and the balance sheet is in better shape.