Eurozone stock markets gave a lacklustre performance yesterday after gains in much of Asia as traders eyed talks between China and the US they hope will finally resolve a long-running trade war.
Frankfurt was a touch higher at the close and Paris ended flat, while London lost nearly 1%, penalised by a strong pound, which tends to weigh on the earnings of multinationals, and by poorly-received results including from British Gas owner Centrica.
London’s FTSE 100 closed 0.9% down at 7,167.39 points, Frankfurt’s DAX 30 ended 0.2% up at 11,423.28 points and Paris’ CAC 40 finished flat at 5,196.11 points, while the EURO STOXX 50 gained 0.1% at 3,263.70 points.
The pound rose against both the dollar and the euro after recovering from early weakness prompted by Fitch warning that it could slash Britain’s credit rating owing to the economic hit from a potential no-deal Brexit.
Wall Street shares were lower in the late New York morning trade, weighed down by “a mixed bag of domestic economic and earnings reports”, according to Charles Schwab analysts.
“US stocks are cooling off from the sharp rally since the December lows, with a plethora of economic data appearing to foster global growth concerns and counter lingering US-China trade optimism,” they said.
In Asia, stock markets mainly climbed on a report that Beijing and Washington were working on an outline for a deal.
Both sides returned to the bargaining table yesterday, with just eight days remaining in a self-imposed deadline to avoid an escalation in the trade war.
“Markets look towards the US-China trade talks for direction,” said IG analyst Joshua Mahony.
“Markets are becoming less sensitive to the fact that these talks are taking place, in some ways reflecting the weariness and scepticism that comes with each meeting.”
Global equities have enjoyed a stellar start to the year on hopes for the negotiations and expectations the Federal Reserve will ease up on its pace of monetary tightening as growth at home and globally slows.
The upbeat mood was enhanced yesterday as Bloomberg News said US and Chinese negotiators were sketching out a number of memoranda of understanding on key issues including intellectual property and technology transfer.
Without naming sources, the report said no final agreement was expected in Washington this week but that China’s top negotiator Liu He would meet US President Donald Trump today.
While there has been no concrete sign of progress in the trade talks, Trump has insisted the talks are going “very well” and has indicated he could push back a deadline for a deal to be done.
A view of the trading room at the Frankfurt Stock Exchange. The DAX 30 ended 0.2% up at 11,423.28 points yesterday.
