A CPI-fuelled drop in sterling has helped boost the FTSE on a day that has also seen widespread gains in response to a more optimistic outlook for US-China trade talks. 

  • Markets surge as optimism of US-China trade talks grow
  • Sterling weakening after drop in UK CPI
  • Copper miners gain ground amid bullish outlook 

Global markets have been buoyed by the prospect of a breakthrough in trade negotiations between the US and China, with Steven Mnuchin stating it is “so far, so good” when it comes to talks this week. With Trump willing to push back the 1 March deadline if progress is made, the optimistic tone struck by Steven Mnuchin not only alludes to a potential breakthrough, but also the prospect that markets should not treat that deadline as sacrosanct. 

The pound has weakened in the wake of a sharp drop in UK inflation, with the CPI reading tumbling to a two-year low of 1.8%. This takes us below the 2% target set by the chancellor, easing any pressure on the Bank of England to raise rates once more. Clearly, with growth on the slide and inflation cooling down, we are now moving into a period where the Bank of England can feel emboldened to act as they see necessary if the economy takes a hit from a no-deal Brexit next month.

It comes as no surprise to see Antofagasta near to top of the FTSE gainers today, as the prospect of a breakthrough in US-China trade talks help boost prospective demand for copper. Today also saw Morgan Stanley join the chorus of copper bulls, with the bank predicting a 14% rise for the metal this year, driven by slowing supply. With global supply on the wane, and the prospect of a rise in demand if the US and China reach an agreement, it is no wonder investors are seeing the attractiveness of the likes of Antofagasta, Glencore, and Anglo American.

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