Trade deal hopes lift stocks

Heading into the close, the FTSE 100 is down five points, while Wall Street is up 60 points, bolstered by hopes of a trade resolution.

• US & China apparently still close to a deal
• Trump wants a change at the Fed
• Oil stockpiles fall, driving crude higher

Markets have been kept busy today thanks to some statements from the US Treasury Secretary and his boss, plus a drop in US durable goods orders. European markets and US futures were given a lift this morning by Steve Mnuchin, who opined that the US/China talks were 90% complete, leading to brief hopes that a trade deal could be close. The only problem is that, a month ago, the two sides were only 5% away from a deal. Thus the bounce has been relatively short-lived, with the mood music suggesting that neither side is aiming to come away with a deal, and indeed both are preparing for more tariffs and further conflict. 

It appears that Mr Trump is still determined to remove Jerome Powell, reiterating his view that he could demote the Fed chair, while also giving Mario Draghi the ultimate unwanted compliment, saying that the ECB head should be Fed chair. Perhaps Mr Draghi would like to throw his hat into the ring when Powell’s term comes up? But this would make dealing with recalcitrant German policymakers look like child’s play compared to attempting to please the petulant occupant of 1600 Pennsylvania Avenue. Durable goods orders fell again, and the previous month’s figures were revised down too, which at least helps to reinforce the dovish case, after Bullard’s more cautious message yesterday on rate  cuts.

Crude oil stockpiles have fallen, according to the afternoon’s EIA figures, driving oil upwards for a second successive day. Oil’s failure to keep pace with equities over the past few weeks has raised concerns that the rebound in risk appetite is waning, since everything (by and large) went up together in Q1. But if demand is picking up into the summer driving season, then there may be some more gains for crude until the traditionally weak end of year period kicks in.