US equities ended yesterday in green on the back of not least Trump further opening the door for an extension of the trade truce with China if the parties were close to a “real deal”. Meanwhile, comments from Senator Marco Rubio that he intends to submit a bill to tax corporate buybacks limited the equity rally. This morning most Asian equity indices are trading flat in a fairly eventless session as markets await news from Beijing on trade talks. Chinese trade data showed a surprising rise in exports but the shutdown for Lunar New Year – which this year comes 10 days earlier – likely boosted the figures.
What to watch today is the trade negotiations between the US and China as two days of high-level talks have started in Beijing today. Focus at these meetings are on how to enforce a trade deal with the aim of finalising a framework. Today’s highlight in the euro area is the German GDP figure for Q4 2018. We expect the German economy avoided slipping into technical recession, however the quarterly growth pace is likely to have remained subdued at 0.1% q/q.
In the UK, the House of Commons will vote on Brexit. While the next ‘meaningful vote’ on a full Brexit deal has been postponed as PM Theresa May and the EU27 have agreed to continue negotiations in late February, this is an indicative vote. May will deliver a statement to the Commons, which the MPs will vote on and which is amendable. Based on what we know so far, we may be in for another “kicking the can down the road”, as PM Theresa May has promised another vote also late-February. The vote begins 18:00 CET.