European cash equity markets are broadly higher ahead of the midway stage (FTSE +0.4%, DAX +1.2%, CAC +1.1%, FTSE MIB +0.9%). Auto related stocks are among the best performer, led higher by Michelin after the French tyre maker reported strong fourth-quarter profit and said they expect it will rise further this year. Broader risk sentiment has also been underpinned by growing optimism surrounding the US-China trade talks and news overnight that US lawmakers have reached an agreement in principle to avoid another government shutdown. As such, core European bonds opened firmly in the red although have since pared the bulk of these losses while Treasuries continue to flirt with the overnight lows. There has not been much data for investorS to work with – Swedish unemployment held steady at 7.0% while Portuguese CPI was slightly stronger at +0.5% YoY (f/c. +0.4%). Comments from ECB officials were also relatively mundane as Weidmann argued he sees good reasons to stick to the medium term outlook for inflation, Nowotny added that they will look at the decision regarding interest rates in the summer, and Lane said the Governing Council has a data dependent perspective on monetary policy. Turning to currencies, the Dollar Index is little changed for the day and holding onto the 97.0 handle having eased back from the eight-week high seen overnight at 97.2. The Swiss Franc is the weakest among the G10’s while commodity related currencies have benefitted from higher energy prices – US crude futures are up around +1.4% as we write. Spot gold has added +0.4%. Looking ahead, futures are pointing to a higher open on Wall Street where we await earnings from PG&E, Omnicom and Under Armour. On the data front, JOLTS jobs openings are the sole release but we do also expect possible comments from Bank of England Governor Carney and Fed Chair Powell.
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