Markets rise as US-China trade talks intensify

The US government is stepping up talks with China, while a deal appears to have been reached to avoid another shutdown. Meanwhile, TUI has dragged airlines lower amid tumbling profits.

• Markets rise on optimism over government funding

• TUI earnings hit airline shares

• Central bankers in focus

European markets are on the rise in early trade, with the optimism seen throughout the Asian session transitioning into Europe. A significant amount of global sentiment rests on Donald Trump’s shoulders, with the ability to break the deadlock in talks with China and avert another government shutdown key for market direction. Signs point towards a breakthrough in talks between the Democrats and Republicans over a potential deal which could avert another government shutdown. However, with Trump having to approve any deal, there is still a good chance the President will push back in hope of getting greater concessions on border security.

This week represents another chance for the US and China to find some form of compromise, with less than three weeks until the reimposition of harsh tariffs on Chinese goods. Much of the optimism we have seen in global markets overnight and into this morning centres around the Chinese optimism that a deal could be done in time, with negotiations ramping up as the week progresses. While Trump may not meet his Chinese counterpart before the 1 March deadline, Thursday’s meeting between Chinese Vice-Premier Liu and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin points towards a willingness to come to an agreement.

TUI is leading the losers in the FTSE 100 today, with the tour operator doubling their Q1 losses after a summer heatwave dented demand from UK and Scandinavian markets. Fresh off the back of a profit warning last week, the impact of common denominators such as weather and value of the pound has got the rest of the airlines spooked, with easyJet and IAG joining TUI in the red.

Today sees a focus on the central banks, with Jens Weidmann, Mark Carney, and Jerome Powell all making appearances today. With the global growth picture taking a nosedive, and inflation on the slide, markets will be watching carefully to note any dovish shift in central bank groupthink today.

Ahead of the open we expect the Dow Jones to open 144 points higher, at 25,197.