 Good morning and welcome to CMC markets on Friday the 22nd of February and this quick look at the week ahead beginning the 25th of February and but another fairly decent week for equity markets The FTSE 100 notwithstanding which has had a poor week but the S&P is headed towards that 2800 level and those three areas of resistance that I talk that I highlighted a Week or so ago that could be the next key level for US equities if we look at these peaks here in mid-October The end of October and the middle of November around about 2820 That's the next key resistance level for US stocks if we look at the Germany 30 or the DAX That is a poach. That is also approaching some key resistance levels We're actually right on the cusp of it right now trend line resistance from the peaks last year between May and June 13,170 That's currently currently coming in around about 11,520 And I think the gains that we're seeing in equity markets are coming despite further disappointing Economic data if you look at the data that we've seen coming out of Germany This week and the picture for the German economy particularly manufacturing Is getting an awful lot worse? Yes, it has been slightly offset by an improvement in services But ultimately what we've seen over the course of the past week is lackluster Business sentiment continuing to deteriorate PMIs manufacturing PMIs also slipping back to 47.6 The worst PMI number in over six years and as we look ahead to the new week The same concerns that have really I think been dogging markets for the last three or four weeks continue to act as A little bit of a wall of worry if we look at Brexit talks They're pretty much as they were completely deadlocked though We are approaching another key deadline on the 27th of February when to read Prime Minister UK Prime Minister Theresa May will be Looking to bring back a potential new deal I'm not sure how different it's going to be to the old deal But it will be brought back to the UK Parliament potentially For another meaningful vote in the absence of that happening We could see a number of amendments passed by MPs to try and avert the prospect of a no deal Brexit That still remains the default position MPs are striving to make sure that is not on the table But unfortunately they're finding it very very difficult to get a majority for doing that With the result that we've seen political the political the big two political parties start to splinter Into a new faction in the UK Parliament Which is very much a remain orientated function the independence group And I think about the only thing they do have in common is they want to remain in the EU because that's exactly what we want Another remain party The pound holding up fairly nicely Not really moving in one direction or the other I think the upside there once again is remaining constrained by the fact that there are still no prospect of Any meaningful progress on the Brexit deal But I think what is becoming increasingly apparent is that there will have to be an Extension whether or not you think that it's likely I think the fact is that given the amount of legislation will be have to be passed in the event of a deal You'll still need a extension to article 50 to get the necessary legislation through the Parliament So in terms of the pound against the dollar if we look at cable We're still pretty much in a range, but certainly in terms of where the price action is leading us There is decent support around about one twenty seven eighty But there's also a decent area of resistance around about one thirty two But one thing I would say is that when I look at euro sterling The outlook for euro sterling actually looks more negative for the euro than it does For the pound every single rebound that we've got off this very important support level at eighty six twenty Has got an awful lot shallower and that suggests to me that we could well see Further sterling gains going forward now putting aside setting aside the political backdrop That suggests to me that the pound could actually does have room to go higher against the euro what the catalyst for that will be It's hard to say, but certainly I think in terms of The German economy and the economic recovery in Europe is Increasingly unlikely that the ECB will be able to tighten the monetary policy much further Than it already has and ultimately the next move could well be an easing bias and I think as we look to the back end of next week, which will be the first of March and Obviously, that is also the trade deadline And that is likely to be extended I think it's highly unlikely that President Trump will increase the tariffs on Chinese goods when ultimately there is evidence that U.S. China trade negotiators are Making progress, so I think it's likely that we will see an extension to that deadline Given some of the smoke signals that have been coming from recent discussions as well as the chatter over various memoranda our President Trump and China's top trade negotiator Liu He Meeting over the course of the next couple of days to assess the progress on the ongoing talks And I think given how close we are To that first of March deadline. I think it's highly and I think it's highly likely that We will see an extension to that deadline given recent comments by President Trump that ultimately he's not really wedded it to I hard a hard deadline so That's some that that's the I think the outlook for For for for the for the next for the next week or so other items to keep an eye out for our fourth-quarter US GDP We've also got the latest Humphrey Hawkins testimony from Fed chair Jerome Powell In light of the minutes that were released earlier this week Where bed officials I think made it quite clear that they weren't in any rush to raise rates any further That being said there was no evidence that they were looking to cut them either So I think in terms of Fed policy we're at neutral right now And I think that's likely to keep any upside in the dollar fairly constrained Obviously when set against central bank policy elsewhere, which is likely to continue to remain easy So we've also got the Bank of England inflation report hearings on Tuesday the 26th of February and that'll be another opportunity for MPs to quiz Bank of England Governor Mark Carney Another central bank officials on bank preparations for Brexit now that we are just over a month away But also I think on the health or otherwise of the UK economy Which to all intents and purposes still looks in much better shape than the economy in Europe And I think that's why you're seeing the pound looks slightly more resilient against the euro On the Friday, we've got global manufacturing PMIs and they're likely to show little sign of any pickup Over the course of the last month or so Japanese manufacturing PMIs in contraction German manufacturing PMIs in contraction We did see a little bit of a pickup in French manufacturing PMI, but it was It was pretty feeble best and with China manufacturing likely to have been disrupted by the Chinese new year I think it's probably too soon to suggest that we'll see any evidence of a pickup in the manufacturing numbers. It's also a big week for earnings We've got four-year results for ITV Rolls-Royce Aston Martin Lagonda post its first IP Post IPO Share price performance of Aston Martin Lagonda has been pretty disappointing in the wake of the IPO Certainly, I think Obviously the slowdown in China is not helping Aston Martin's numbers, but I can't help thinking that Given how far we've dropped that an awful lot of the bad news there is likely to have been priced in but again It's very very difficult looking at the auto market at the moment to suggest that There's any evidence of any basing out what I would say is we do appear to have found support just above These twin lows here around about 1100 so it'll be interesting to see whether or not those numbers Actually surprised to the upside We've also got JC Penney and Nordstrom fourth quarter Numbers for US retail and Canadian GDP on the 1st of March and Canadian inflation numbers on the 27th of February So that's it for this week. Thank you very much for listening Michael Houston talking to you from CMC markets