Easing of trade tensions boosts European stocks

Global stocks rocketed higher yesterday as investors judged recent trade war fears were overblown, dealers said.“Buyers came back with a vengeance,” said Jasper Lawler, at London Capital Group.In Europe, Frankfurt’s DAX 30 index jumped 2.9% higher at 12,305.19 with the CAC 40 in Paris following close behind with a 2.6% gain at 5,276.67. London climbed 2.4% at 7,199.50, with telecom shares climbing after strong bidding for frequencies for the next generation of mobile phone technology.Meanwhile, Wall Street added to gains made the previous day, with the Dow up 1.4% in late morning trading.Tokyo led the gainers in Asia, climbing a solid 1.5% as the more positive market sentiment reduced demand for the haven yen, pushing the currency down. Hong Kong and Shanghai were closed for holidays.“Investors are expressing confidence that a solution will be found before a full-blown trade war erupts,” said Craig Erlam, senior analyst at trading firm Oanda.However, he also sounded a note of caution over the lingering market concerns.“The reality is that a trade war remains a real possibility,” warned Erlam.“US President Donald Trump is looking to pick a fight with the world’s second largest economy, a fight he believes is easy to win, and China is willing to go toe to toe with the United States – even if it means inflicting harm at home.”Meanwhile, Lawler at London Capital Group warned the given the volatile environment, a Tweet or comment by a government official could quickly turn to the rally into a rout.“The two-day rally on low volume means there is no real conviction from investors,” he said.The more bullish outlook for stocks came on the heels of a see-saw session on Wall Street on Wednesday that saw equities rally impressively into the close.Traders have been spooked by tit-for-tat accusations and measures between China and the United States that some fear could lead to a full-blown trade war between the world’s top two economies.China unveiled plans Wednesday to hit major US exports in retaliation for US tariff plans detailed the day before.“It’s hard to see how anyone wins in this but investors currently, despite the declines we’ve seen, are expressing confidence that a solution will be found before a full blown trade war erupts,” said Erlam.The Dow whipsawed nearly 800 points between its session low and peak on Wednesday before finishing with a gain of 1%.Analysts said the catalyst for the turnaround was comments by recently appointed White House economic advisor Larry Kudlow, who suggested Trump’s strident approach to China was a negotiating tactic to win concessions.“I understand the stock market anxiety. I get that,” Kudlow told Fox Business. “I think at the end of this whole process, the end of the rainbow, there’s a pot of gold.”In London, the first auction for frequencies for fifth-generation wireless technology, which promises to dramatically speed up data transfer speeds, brought in just under £1.2bn.Shares in Vodafone jumped 3.3%.