Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Global stock markets are starting the week in good heart, as Washington and Beijing inch towards a ‘phase one’ trade deal.
U.S. and Chinese officials have both said they are “close to finalizing” some parts of a preliminary trade agreement, following a high-level phone call on Friday.
China’s commerce ministry says that technical talks about the phase 1 trade deal text with the US is “basically completed”.
Both sides have agreed to properly address core issues, it says.
And there’s also a mini-breakthough: The US has agreed to import cooked poultry from China, while Beijing will lift a ban on U.S. poultry.
This has driven Asia-Pacific stocks to a three-month high this morning, with gains in China (+0.7%), Japan (+0.3%) and South Korea (+0.2%).
The US trade representative has also said that the two sides are “close to finalising some sections” of an interim agreement to ease trade tensions between the two countries, following that call between Robert Lighthizer, Treasury secretary Steven Mnuchin, and China’s vice-president Liu He.
Lighthizer’s office added that the negotiators “made headway on specific issues”.
But investors shouldn’t, ahem, count their chickens yet.
A ‘Phase One’ trade deal could mean that planned US tariffs on Chinese goods aren’t imposed in December, which could boost trade and economic growth.
Donald Trump is very keen to sign such a deal when he meets China’s Xi Jinping next month, at the Apec meeting in Chile in November.
However, this would only be a stepping stone towards a comprehensive deal, which could take much longer….
Also coming up today
The pound is hovering around $1.282 this morning, as EU leaders prepare to agree to a Brexit extension — probably to 31 January.
In Westminster, prime minister Boris Johnson will make another push for a general election in December, but Labour are expected to block him again.
Ipek Ozkardeskaya of London Capital Group says the pound would weaken if EU leaders only granted a short delay.
As it stands today, the probability of a no-deal Brexit is very slim. From the market perspective, a no-deal scenario is almost fully reflected in sterling prices near the 1.30 mark against the US dollar.
Pound traders have further trimmed their net short positions during the week that ended on October 22nd and have already moved on to pricing Britain’s next political challenges.
- 11am GMT: CBI survey of UK retail sales in September
- 12.30pm GMT: US trade date for September
- 3pm GMT: ECB president Mario Draghi speaks at a ‘farewell event’ before his term ends this week