US-China deal disproportionately benefits US stocks

European markets are failing to keep up with their US counterparts, as traders chew over yesterdays trade deal. Meanwhile, the housebuilders are outperforming in the wake of a RICS report. Finally, airlines are falling back after a government bailout for FlyBe.

• US stocks outperform after trade deal
• Housing sector look set for a strong Q1
• FlyBe bailout highlights inconsistent government approach

US markets continue to outperform their European counterparts today, as the dust settles on a somewhat lopsided US-China trade deal. For all the hope that the eventual trade deal will spark a resurgence in global growth, this first phase instead sees $200 billion of additional Chinese purchases of US goods and services in exchange for a slight reduction in tariffs currently imposed on Chinese goods. Many tariffs barriers to trade remain, and with tariffs on Chinese goods approximately 20% higher than pre-trade war levels, there is precious reasoning for global exporters to believe the Chinese engine of global growth is about to get back into full flow.

Housebuilders continue to outperform in the wake of the UK election, with RICS signalling a sharp uptick in sales expectations. With the Halifax HPI reading and RICS survey both pointing towards a surge in demand and confidence, there is plenty of optimism surrounding the housebuilders as we move through 2020.

Low cost airlines have taken a hit off the back of a £100bn state bailout of FlyBe, with the government offering the ailing airline a fuel subsidy that many have viewed to breach competition and state aid regulations. The inability to operate within a market environment highlights the likeliness that FlyBe will ultimately falter in when this subsidy runs out. However, in the meanwhile, the government is likely to be banking on the premise that the sector could arrest this recent uncertainty fuelled nosedive. Interestingly this move shows a distinct lack of consistency from the government, with the conservatives allowing Thomas Cook to go under just three-months ago.