Stocks and Oil rise as risk rally remains in place

There’s been further gains seen in risk assets this morning with stocks building on their recent gains while brent crude has notched a 3-week high back above the $60 a barrel level. A third day of US-China talks has provided greater hope of a de-escalation in the trade tensions between the world's two largest economies with people close to Donald Trump suggesting he is getting more keen to strike a deal in order to boost the stock market - reports that gain greater credence as they coincide with several tweets from the US president trumpeting how well the negotiations are going. Oil received a helping hand from last night's API inventory release which showed a larger than expected drawdown of -6.1M and traders will await this afternoon's more widely viewed EIA number (3:30PM GMT) to see if prices can gain traction around these levels.   

UK stocks hit 4-week high

The FTSE has added over 50 points to trade back above 6900 and up at levels not seen in 4 weeks. Mining stocks feature prominently amongst the best performers in the index with the positive news from China providing a clear bump, while housebuilders are gaining after a pleasing trading update from Taylor Wimpey and also on the possible belief that a no-deal Brexit is less likely after the government’s Commons defeat yesterday evening. Taylor Wimpey have announced that the firm are on track to meet performance expectations for 2018, despite rising caution amongst buyers as the Brexit deadline looms large. The company reported a total order book value of £1.78B vs £1.63B for 2017 and seems to be performing fairly well in the face of high levels of uncertainty.

Commons defeat for PM May

MPs voted 303 for to 296 against on an amendment which essentially restricts the government’s ability to make changes to tax law in the event of a no-deal Brexit. This is being taken by some as an indication that parliament are opposed to a no-deal outcome, although cynics are claiming that PM May in private wanted this bill to pass as it could garner additional support for her deal by making it relatively more attractive compared to a no-deal outcome. Housebuilders are arguably the most exposed to adverse moves in the event of a no-deal Brexit with Bank of England projections for a worst case scenario predicting a drop of 30%, so any indication that no-deal is less likely will be seen as positive for the likes of Taylor Wimpey and Berkeley Group, with shares in the two higher on the day by 5.3% and 3.7% respectively. The pound continues to tread water with no real clear direction in the near term as the markets await further developments on the Brexit front.