Global stock markets leapt yesterday as positive signs emerged from US-China trade talks aimed at averting an escalation of a tariff war between the world’s top two economies.
US President Donald Trump said the negotiations in Beijing were going “extremely well” and his Chinese counterpart Xi Jinping announced the talks would continue in Washington next week.
Trump also said there was a “possibility” he would extend a March 1 deadline for a sharp rise in tariffs on $200bn Chinese goods to go into effect.
Wall Street surged at the news, seemingly unphased by Trump also declaring a national emergency to fund his long-sought US-Mexico border wall.
The Dow Jones Industrial Average index jumped 2% to a two-month high in morning trading.
European markets also “went gaga” for the news of further talks, Campbell said, as Frankfurt’s DAX 30 closed 1.9% up at 11,299.80 points and the Paris CAC 40 followed suit with a 1.8% rise at 5,153.19 points on the day.
Madrid’s IBEX 35 index rose 2.0% after Spanish Prime Minister Pedro Sanchez called an early general election, following the rejection of his draft budget in parliament over the Catalan secession crisis.
London’s index also rose after stronger than expected UK retail sales were reported for January, as consumers seemed to shrug off Brexit blues. The FTSE 100 closed 0.5% up at 7,236.68 points. The EURO STOXX 50 ended 1.8% up at 3,241.65 points.
Trump waded into the Brexit debate in his speech, predicting that US trade with the UK will increase “very substantially” as the March 29 deadline looms for Britain’s exit from the European Union.
The dollar was up versus the euro, while Brent crude oil hit $65.79 per barrel — a three-month high — on tighter supplies caused by a dip in overall Opec output and a crisis in cartel member Venezuela.
Investor hopes were buoyed after President Xi said US-China “consultations between the two teams have made important step-by-step progress”.
While Trump also hailed the negotiations, he seemed uncertain about the final outcome.
“It is going extremely well. Who knows what that means because it only matters if we get it done,” Trump said at the White House.
He also confirmed his comments he might be willing to hold off on increasing tariffs to 25% from the current 10%.
“There is a possibility that I will extend the date,” he told reporters. “If I see we’re close to a deal or the deal is going in the right direction, I would do that.”
US Trade Representative Robert Lighthizer earlier told President Xi that “we have had two very good days of negotiations... we have additional work to do, but we are hopeful.”
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