FTSE 100 preview: Rally to continue as US-China trade talks stay in focus

on Jan 9, 2019

The UK benchmark index looks set to open higher this morning, building on the previous session’s gains, with investor attention staying firmly on the talks between the US and China. On the corporate front, J Sainsbury (LON:SBRY) will continue this week’s retailer reporting.

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Rally to continue

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IG’s opening calls suggest that the FTSE 100 will start trading 0.95 percent higher at 6,927 points. The blue-chip index is likely to take cues from the US, where shares rallied last night amid investor optimism over the trade relations between Washington and Beijing, as President Donald Trump tweeted that the talks were ‘going really well’. CNBC quoted strategists at MRB Partners as saying in a note that the trade situation was setting itself up for a more benign outcome than had been previously expected.

“The US-China power struggle will persist for years, but both economies are now slowing and neither government has the latitude to pursue policies that could threaten to trigger a global recession,” they pointed out, as quoted by the newswire. “The Argentina handshake will morph into a near-term truce.” Asian shares meanwhile have followed the US higher this morning.

At home, the Footsie rose in the previous session, gaining 50.72 points to close 0.74 percent higher at 6,861.60, boosted by the US-China trade talks optimism.

Wednesday’s agenda

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Today’s macroeconomic statements include Germany’s trade balance for November, due out at 07:00 GMT, to be followed by the eurozone’s unemployment rate for the same month, scheduled to be released at 10:00 GMT. Investors will also keep an eye on the fresh round of parliament talks over the UK’s proposed withdrawal agreement from the EU.

In company news, Sainsbury’s will become the second blue-chip retailer to update investors on its performance this week, following FTSE 100 rival Morrisons (LON:MRW). Housebuilder Taylor Wimpey (LON:TW) also reports today.

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