European stock markets are just about in break even territory despite a higher close on Wall Street prompted by soothing comment from the Federal Reserve’s Jerome Powell and the start of a new round of Sino-US trade talks. The negotiations taking place in Beijing Monday come as the Chinese government announced a stimulus programme designed to counteract some of the signs of a slowing economy, including the recently reported weaker manufacturing. In London shares in supermarkets have perked up after discount chain Aldi reported record sales during Christmas week. Competitors Tesco (LON:TSCO), Sainsbury, Morrison and Marks & Spencer ended up basking in the reflected glory as investors assumed that they too will be able to report higher than expected levels of sales during the Christmas period despite the dreaded Brexit effect.
Brexit vote scheduled for next week
On the issue of Brexit, after a few days of respite it has made it back on the Parliamentary agenda and the Prime Minister’s latest proposal, which she abandoned before Christmas, will now be voted on next week in a slightly adjusted form to account for changes on the Irish border issue. The pound is sliding against the euro but only just holding up against the dollar as the proposal is relatively little changed, potentially insufficiently to secure a green light from parliamentarians. In the week ahead the pound is unlikely to get much of a respite given that a major exercise is taking place in Kent simulating a no-deal Brexit situation which would potentially lead to massive traffic queues near Channel ports.
UK new car sales decline
Against the continued backdrop of uncertainty the UK economy continues to show signs of slowing down with new car sales dropping 7% last year, the largest decline since the financial crisis. Industry bodies blame the decline on stricter emissions rules and a drop in demand for diesel cars but the underlying Brexit effect remains the strongest factor in the equation. In contrast, oil prices are on the rise with Brent crude powering nearly 2% higher as the production cuts by Saudi Arabia agreed in December are making themselves felt in the market.
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