Stocks gain as China removes some tariffs

The Chinese decision to remove tariffs on US soybeans and pork has helped push stocks higher. The decline in house prices appears to have been arrested, with growth reaching a seven-month high. Meanwhile, Berkeley Group remains well bid despite a decline in profits and revenues.

• Stocks rise on China tariff news

• House prices grow at seven-month high

• Berkeley Group profits slump, but investors remain bullish

Market sentiment has improved at the tail end of a topsy-turvy week, with the Chinese decision to drop tariffs on US pork and soybeans providing the first concrete step towards de-escalation seen for quite some time. Trump's claim that talks were "moving right along" did help bolster market gains, yet the for the most part it looked much like the market-moving fluff that has been evident throughout the week. From an optimistic standpoint, the Chinese decision to drop 25% tariffs previously imposed on pork and soybeans highlights a firm shift towards closing the gap needed to drag a phase one deal across the line. However, this is also likely to be a move of necessity, with the swine fever epidemic meaning that China has a pronounced undersupply of pork and proteins that need addressing.   

The pound has hit a seven-month high against the dollar ahead of the critical election week that will determine both the direction of Brexit and the economy as a whole. Interestingly, a seven-month high for house price growth mimicked the softness seen in the pound over that period. The resurgence in house prices alludes to a feeling that we are finally seeing light at the end of the tunnel, with activity likely to surge in the event of a conservative majority on Thursday. For UK stocks this sterling resurgence isn't such good news, with FTSE 100  underperformance likely to be a running theme in the event of a post-election recovery for the pound. 

A housing market recovery cannot come quick enough for Berkeley group, with the housebuilder reporting a 31% drop in profits and revenues down 43% over the past six months. With election and Brexit uncertainty holding back activity within the market, the weakness will be primarily viewed as a temporary factor that will fade in the event of a likely conservative majority. With the firm buying back £124.6 million of shares, we have seen little selling for a firm that is expected to outperform once this current economic and political cloud clears in the UK.

Ahead of the open we expect the Dow Jones to open 65 points higher, at 27,743.