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FTSE supported by housebuilders oil prices and trade optimism


The FTSE bounded higher on Wednesday, lifted by trade optimism, as US – Sino trade talks concluded, strong energy stocks as oil extends its gains, and by housebuilders following robust results from Taylor Whimpey. The UK index fell away from session highs as Wall Street pared gains from the open.
US – Sino trade talks concluded today on an optimistic note fuelling hopes that a trade deal could be sooner rather than late. The progress boosted sentiment across global markets increasing demand for risker assets.

Oil Surges For 8th Straight Session
Oil was a notable winner of de-escalation of trade tensions, which combined with a decline in US inventories saw oil climb for an 8th consecutive session. WTI is now above $52 the barrel, up 4% on the day and rallying 14% year to date so far. This sustained move higher comes after a dismal last quarter for oil, which saw it decline 30% from its October peak. The speed that prices have picked up this year suggests that oil was hugely oversold in last year’s sell off. Energy stocks received a boost following the jump higher in oil.

Taylor Wimpey Jumps 6%
Taylor Wimpey rallied to the top of the FTSE leader board after reporting a solid set of results. Despite a challenging economic environment amid Brexit uncertainties, the house builder impressed investors by confirming it was on track to meet 2018 expectations and maintain its 2019 guidance. Given all the doom and gloom over house prices and consumer confidence the market was expecting to be disappointed. Taylor Wimpey’s share price dived a third last year. This latest update shows that Taylor Wimpey is, so far, managing to ride out the uncertainties, offering a ray of hope for the full year release in February.

Drama in Westminster Sees Pound Fall vs. Euro
Pound traders were once again watching the drama unfold in Westminster as the draft Withdrawal Bill was back in Parliament today for the first of four days of debates. Ministers voted in favour of giving the Prime Minister just 3 days to come up with a plan B, in the case that her deal is not approved by Parliament. This is a reduction from the 21 days amendment agreed the last time the Bill was aired in Parliament in December.

This amendment comes hot on the heels of ministers voting in favour of an amendment to the tax bill which would tie the government’s hands in the case of a no deal Brexit. In short what we are seeing is Parliament flexing its muscles and showing that they have the power to prevent a no deal Brexit. 

This vote although close are showing that Theresa May is not commanding a majority in Parliament, meaning that the chances of her deal being approved is looking increasingly slim. Whilst we know that Parliament is against a no deal Brexit, what we don’t know, is what Parliament sees as the solution. This uncertainty is hitting demand for the pound, which fell versus the euro and yen, although moved higher against the Fed hit dollar.

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