Global stock markets rose for the most part yesterday amid renewed hopes for a trade deal between China and the United States after reports said the two sides were close to a breakthrough.
Most Asian and European markets remained in positive territory to the close but the Dow Jones index gave up early gains to drop into the red in midday New York trade.
In London, the FTSE 100 closed up 0.4% to 7,134.39 points; Frankfurt — DAX 30 ended down 0.1% to 11,592.99 points and Paris — CAC 40 closed up 0.4% to 5,286.57 points yesterday.
The dollar traded mixed, and oil prices climbed higher. Ahead of a busy week of data releases and expected market-moving events including the latest Brexit developments, indices got off to a positive start as investors cheered reports saying the tariff stand-off between the world’s top two economies might soon be resolved.
“US economic data has deteriorated and the threat of recession, while still relatively low, has risen,” a Schwab Market Update noted.
The Wall Street Journal said negotiations in February had narrowed key differences and an agreement could be ready for signing at a summit between US President Donald Trump and his Chinese counterpart Xi Jinping later this month.
The newspaper, as well as Bloomberg News, also said Beijing had tentatively agreed to lower tariffs or ease certain restrictions, work quicker to open up its auto market and increase its purchases of US goods.
In exchange for Chinese concessions, Washington would do away with most of the tariff hikes it imposed last year, the reports said.
“Investors are fully aware of these long-term challenges, but a more sustained ceasefire on tariffs will help to reduce business uncertainty,” noted Tai Hui, Asia-Pacific chief market strategist at JP Morgan Asset Management.
“This could provide a much-needed lift to business sentiment and improve growth momentum entering the summer,” he said.
But there were also warnings that investors could be left disappointed.
“With all this positivity comes the risk that the market is buying on this rumour mill and is becoming more exposed should the good news not materialise,” said Neil Wilson, chief market analyst at Markets.com.
Niel Shearing at Capital Economics added that “even if a deal between the US and China on trade is ultimately agreed we don’t expect that a trade truce will now provide a substantial shot in the arm to the global economy”.
Focus turns today to the start of China’s annual National People’s Congress where it is to unveil its 2019 growth forecast, while dealers will be looking for any measures to stimulate the slowing economy.
An official in Beijing yesterday said that the rubber-stamp legislature will vote next week on a bill that will bring “a fundamental change” for foreign investors, which could help ease trade tensions with the US.
Also today, the EU’s chief Brexit negotiator Michel Barnier is to meet Britain’s negotiating team, as both sides seek a breakthrough in the stalemated talks.
The meeting comes after Barnier said Saturday that the European Union was ready to give Britain further guarantees to help push the troubled divorce deal through the British parliament.
Pedestrians walk past the London Stock Exchange offices. The FTSE 100 closed up 0.4% to 7,134.39 points yesterday.
