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World shares breathe easy as Trump pushes out tariff deadline

Stock Markets Feb 25, 2019 04:53AM ET
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By Tom Wilson

LONDON (Reuters) - Equity markets across Europe and Asia rose on Monday after U.S. President Donald Trump said he would hold off on hiking tariffs on Chinese imports, buoying hopes of a resolution to a trade war between the world's two biggest economies.

European stocks climbed 0.4 percent to their highest since October, led by a 0.5 percent bump in Germany's trade-sensitive DAX, where China-exposed sectors from industrials to autos made ground.

Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods planned for March 1 thanks to "productive" trade talks, adding that he and Chinese President Xi Jinping would meet to seal a deal if progress continued.

The U.S. president cited progress in divisive areas including intellectual property protection, technology transfers, agriculture, services and currency.

Trump's tweeted remarks are the clearest sign yet that the United States and China are moving towards a deal to end a trade war that has dragged on for months, dragging on global growth and disrupting markets.

The remarks were set to embolden larger, risk-averse investors to make solid moves after weeks of guesswork on the direction of the U.S.-Sino trade talks, analysts said.

"The people sitting on the fence and previously weren't sure have come out," said David Madden of CMC Markets. "We could see a continuation of the upwards move, on a more aggressive rate than we have previously seen it."

By mid-morning, MSCI's world equity index, which tracks shares in 47 countries, was up 0.2 percent to its highest since October.

The risk-on mood in Europe spilled over from Asia, where MSCI's broadest index of Asia-Pacific shares outside Japan added 0.7 percent to the highest since October, and is up 10 percent for the year so far.

Chinese blue chips scaled their highest in eight months on the back of a 6 percent gain, their biggest daily increase since July 2015. They are up nearly a quarter this year.

The Japanese benchmark Nikkei also gaining, climbing half a percent to its highest since December.

PATIENT POWELL?

U.S. stocks were poised to be lifted, too, with the Dow and Nasdaq well-positioned after nine straight weeks of gains.

A dovish shift from the U.S. Federal Reserve, which has set aside rate hikes for now, has also helped. Fed Chairman Jerome Powell will testify on U.S. monetary policy on Tuesday and Wednesday.

"Expect him to emphasize patience, stating that any more hikes this year would likely require some pickup in inflation," wrote analysts at TD Securities in a note.

Participants in currency markets shared that sentiment.

"We expect more of the same going forward, with Powell generally supportive of risky assets," said Adam Cole, chief currency strategist at RBC Market.

"We think the mood of optimism and better bid for risk is probably something we live with for the week."

The trade news was largely priced into currency markets, with the dollar nudging down 0.1 percent against a basket of currencies to 96.518 amid the risk-on mood.

The euro ticked up 0.1 percent against the greenback, trading around $1.1350, and still within the $1.1213/1.1570 trading range that has held since mid-October.

Sterling was idling at $1.3069, with markets awaiting clarity on the direction of Brexit talks.

Britain's government is considering different options, including possibly delaying Brexit, if parliament fails to approve Prime Minister Theresa May's deal by March 12.

The British premier on Sunday put off a vote in parliament on her Brexit deal to just 17 days before Britain's scheduled March 29 departure from the European Union, setting up a showdown this week with lawmakers.

In commodities, oil prices fell, dragged down by plentiful supply as U.S. exports soar and compete with traditional producers from the Middle East in key markets such as Asia.

International Brent crude oil futures were at $66.99 a barrel, down 0.2 percent from their last close.

For Reuters Live Markets blog on European and UK stock markets, please click on: [LIVE/]

World shares breathe easy as Trump pushes out tariff deadline
 

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Comments (7)
Dave Jones
Dave Jones Feb 25, 2019 4:56AM ET
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Trumped up
Ivan Evans Vannet Apostolic Huntsman
Ivan Evans Vannet Apostolic Huntsman Feb 25, 2019 2:23AM ET
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Very True, Evidently most people don't understand negotiations. You never ask for only what you want. Ask for more and work to get atleast what you intended with possibly of more. And you have to first consider how to exit Britexit with a deal of Settlement.This is one of the few things the democrats have agreed on. Protecting intellectual property is paramount as well.
Zoltan McVeigh
Zoltan McVeigh Feb 25, 2019 1:45AM ET
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Evidently most people don't understand negotiations. Haha You never ask for only what you want. Ask for more and work to get atleast what you intended with possibly of more. This is one of the few things the democrats have agreed on. Protecting intellectual property is paramount.
Habanero Peppers
Habanero Peppers Feb 24, 2019 10:19PM ET
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Trump will fold and call it a win. There's an election coming.
Zoltan McVeigh
Zoltan McVeigh Feb 24, 2019 10:19PM ET
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Trump couldn't quit now if he wanted. If he was to folded now, it would cost him a second term. The democrats would use it to their full advantage.
Kenneth Gold
Kenneth Gold Feb 24, 2019 8:00PM ET
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The extension of trade talks is what props up these markets....solid as a house of cards....Pres Trump knows it and uses it to his advantage.
Gabe Domen
Gabe Domen Feb 24, 2019 7:54PM ET
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Really? So this will continue forever...what are the extraordinary advances? Only known and qualified by trump. The guy is now in a conundrum, more time and note concessions. At least I won't read the news for another week, will be useless, boring and repetitive.
Bade Sahib
Bade Sahib Feb 24, 2019 7:02PM ET
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Tariffs on Tariffs delayed . Is Jared Kushner buying calls and puts on the Index . Pure manipulation going on at the highest levels
 
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