The FTSE 100 is flat this morning despite a big rally on the mainland bourses, and another positive day on Wall Street yesterday. London edged into the green as the session wore on, as oil prices ticked higher, but we saw a split among the heavyweights with mining stocks up while pharma weakened. 

In contrast the Dax and Cac are up 0.9 and 0.7 per cent respectively while the S&P 500 and Nasdaq added 0.6 and 0.8 per cent yesterday. European stocks were lifted on a report that the German government is planning to pass a package of tax breaks worth an estimated €46bn, while falling inflation in the Euro area is another big boost for risk appetite. Also lifting sentiment, Airbus rallied 4 per cent on a report that China is considering placing an order for hundreds of aircraft while Rheinmetall will join the Stoxx 50 benchmark on 20 June, replacing Kering. Rheinmetall’s shares have risen some 200 per cent this year on the boom in European military spending and generational realignment of the geopolitical map of Europe.

Today will see G7 countries hold talks on trade at an OECD meeting in Paris ahead of their summit in Canada in two weeks – the key is whether there is much appetite to nail your colours to a trade deal before court cases are complete. The US Court of International Trade’s ruling against US President Donald Trump’s tariffs prolongs the situation and creates further uncertainty. But markets seem content to see the glass half full for now. The G7 summit in Canada kicks off in 11 days. The White House has pushed for countries to submit their best and final offers by today. Could we see an announcement from Trump if he doesn’t get what he wants?

The market seems to think that President Trump speaking to China’s Xi this week is good for relations between the US and China. The inevitable noise though as Trump said on Wednesday that China’s President Xi Jinping was “extremely hard” to make a deal with. Meanwhile, Elon Musk blasted Trump for his tax and spending bill.  

Crowdstrike was the big faller after-hours in the US, declining about 6.5 per cent after the company’s guidance fell short of expectations. The firm called for $1.14bn to $1.15bn in revenue in the July quarter, shy of the average analyst estimates. Revenues rose 20 per cent but still posted net loss.

Among the mid-caps in London, Martin Sorrell’s S4 Capital shares jumped 5 per cent despite the company cutting its annual revenue forecast after warning that its major tech clients continue to prioritise capital expenditure on expanding AI capacity. A 13 per cent fall in operating profit did for B&M European Value Retail, with shares down 5 per cent early doors today. More on all that here 

Elsewhere, rate cuts are coming. Developed world central banks seem to have a clearer path to do more rate cuts this year as inflation cools and economic and trade policies remain fluid and uncertain. The Bank of England will continue cutting rates, governor Andrew Bailey made it pretty clear yesterday, signalling weaker pay and inflation. The question is how far and how fast. Have we left inflation behind? Can markets now relax about central banks loosening policy rates further without stoking inflation? If so, it could be very positive for risk assets. 

The European Central Bank is a nailed-on certainty to cut tomorrow, particularly as yesterday’s data showed inflation in the Eurozone fell to 1.9 per cent in April from 2.2 per cent the month before and below the 2 per cent estimated. We could see the ECB lower its benchmark policy rate to 1.5 per cent from today’s 2.25 per cent over the next 3-4 months, implying two more cuts after tomorrow.  

The Jolts jobs data from the US yesterday was interesting – hiring picked up but so did layoffs. The data comes ahead of the May jobs report due out this Friday, which could be shaping up for a low 64,000 number according to Apollo (Slok). This will matter for how quickly the Fed moves on rate cuts.

By Neil Wilson, investor strategist at Saxo UK