European cash equity markets are mostly higher ahead of the midway stage with the Euro Stoxx 600 reaching its best level since mid-November (FTSE +0.3%, DAX +0.4%, CAC +0.7%, FTSE MIB -0.2%). Earnings season continues to play its part with notable gains for AstraZeneca, Airbus and Nestle post earnings which has led to outperformance in their respective sectors. Bank stocks have lagged meanwhile as Credit Agricole and Credit Suisse have moved lower since their fourth-quarter updates. Investors are also keeping an eye on the US-China trade negotiations with reports this morning suggesting that Trump is considering a sixty-day extension to the tariff deadline. The FT followed with reports that Trump will likely take his time regarding auto tariffs. In fixed, core European bonds slightly higher on the day with a soft German GDP print providing support – German growth was flat QoQ in the fourth quarter versus expectations of a +0.1% increase. Dovish remarks from the Bank of England’s Vlieghe will have underpinned Gilts meanwhile after he said the appropriate pace of monetary tightening is somewhat slower than he judged it to be a year ago. Turning to currency space, the Dollar Index is little changed around 97.2 while the New Zealand Dollar is the best performer among the G10’s. Sterling has softened ahead of a series of UK parliament votes later today which could see another defeat for UK PM May as the ERG group fear her motion would rule a no-deal scenario – something they are keen to avoid. Elsewhere, oil prices are higher with US crude futures up +1.0% and holding above $54 a barrel. Spot gold is flat. Looking ahead, futures are pointing to a slightly higher open on Wall Street with earning due from Coca-Cola and Kraft Heinz. On the data front, we await US retail sales, producer prices, jobless claims and business inventories plus Canadian manufacturing sales and house prices.
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