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Good morning. Traders on the continent will need to digest an extra day’s newsflow following Wednesday’s market closures. The latest update on U.S.-China trade was positive, while the Federal Reserve struck a hawkish tone at its latest meeting and U.K. rates and Brexit are also both in focus. Here’s what’s moving markets. 


Japan and China are on their holidays, but traders in South Korea and Hong Kong were around to cheer a CNBC report saying the U.S. and China could announce a trade deal by May 10 as Chinese Vice Premier Liu He heads to Washington. The dollar held on to gains that followed Fed Chairman Jerome Powell’s comments that inflation will rebound without fresh stimulus from the U.S. central bank. Oil traders looked past the deepening crisis in Venezuela, sending crude futures lower amid a bigger-than-expected jump in U.S. stockpiles.

Playing Catch-Up

Equity investors in continental Europe will be catching-up following the Labor Day holiday on Wednesday. Chip stocks are faced with mixed signals after  Apple Inc.’s better-than-expected report on Tuesday evening was in contrast to a lackluster quarterly sales forecast from semiconductor giant Qualcomm Inc. last night. There are plenty of earnings out from Europe this morning too: Danish brewer Carlsberg A/S maintained its full-year outlook, while Anglo-Dutch oil firm Royal Dutch Shell Plc is on the list of large caps still to come. 


A month of Brexit talks between U.K. Prime Minister Theresa May and her arch rival Jeremy Corbyn could be coming to a close, amid what May described as a “greater commonality” concerning a customs union. She wants to call it a wrap next week, either with an agreement or without one. The pound gained Wednesday but the strength was almost entirely wiped out by the hawkish Fed comments later. Meanwhile, the British prime minister faces big losses in local elections on Thursday as voters register a protest against her handling of the divorce.

U.K. Rates

Staying in Britain, policy makers at the Bank of England have been meeting for the first time since the U.K. and European Union agreed to kick the Brexit can down the road until pumpkins come out in October. Mark Carney’s squad of economists is likely to vote 8-1 in favor of keeping rates as they are, but may adopt a more hawkish tone aimed at preparing financial markets for the possibility of a hike this year, according to analysts at Bloomberg Intelligence. 

Coming Up...

U.K. construction purchasing managers index and manufacturing PMIs from the euro area, Turkey and South Africa keep the data schedule busy, while European Central Bankers Ewald Nowotny and Peter Praet are due to speak at a conference in Vienna. European Central Bank Vice President Luis de Guindos said Wednesday that the low interest rate environment “is with us for the foreseeable future.”

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