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Global stocks gain as U.S. eases Huawei restrictions

Stock MarketsMay 21, 2019 07:45AM ET
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© Reuters. The London Stock Exchange Group offices are seen in the City of London, Britain

By Tom Arnold

LONDON (Reuters) - Stock markets gained on Tuesday, with chipmakers and companies exposed to Asia among the best performers, after Washington temporarily eased trade restrictions imposed last week on China's Huawei.

In Europe, the broader Euro STOXX 600 climbed 0.6%, extending gains earlier in the trading session, with Germany's DAX rising 1.1%, while France's CAC 40 added 0.6%.

At the close, China's Shanghai Composite index was up 1.23%, while the blue-chip CSI300 index ended 1.35% higher.

U.S. President Donald Trump's government added Huawei to a trade blacklist last week, escalating trade tensions between the world's two biggest economies.

But Washington then allowed Huawei Technologies Co Ltd to purchase U.S.-made goods to maintain existing networks and provide software updates to existing Huawei handsets until Aug. 19.

"The Huawei extension is in some sense providing a relief rally as it eases the worst fears of market participants that we are drifting towards a fully fledged trade war," said Aberdeen Standard's head of global strategy, Andrew Milligan.

Chipmakers AMS, STMicroelectronics and Germany's Infineon added between 2% and 6%, while the tech sector rose 1.6% after losing almost 3% on Monday.

In London, heavyweights HSBC, Prudential (LON:PRU) and Standard Chartered (LON:STAN) boosted the blue-chip index as markets rose on hopes of an easing in the trade tensions.

In Asia, gains in heavyweight Samsung Electronics (KS:005930) helped South Korea's KOSPI stock index close up 0.3%.

The MSCI index of world shares, which tracks shares in 47 countries, was up 0.1% after losses in the two previous days.

"Equity markets remain hostage to developments in the ongoing U.S.-China trade battle," said Rupert Thompson, head of research at Kingswood.

"We still believe some kind of deal will eventually be reached - most likely at a Xi/Trump meeting at the G20 Summit in late June."

In Germany, Daimler gained 1.1%, getting an additional boost after German newspaper Handelsblatt reported the company was looking to cut administration costs by 20%. Daimler declined to comment.

Italy's biggest phone group Telecom Italia (MI:TLIT) led gainers on the STOXX 600, rising 1.9%, after posting first-quarter earnings in line with expectations and confirming its guidance for the next three years.

Markets now await Wednesday's release of minutes from the U.S. Federal Reserve's May 1 meeting, looking for signals on future interest rates after Chair Jerome Powell said on Monday that it was premature to ascertain the impact of trade and tariffs on the trajectory of monetary policy.

U.S. S&P 500 e-mini futures were up 0.6%.

POUND SLIPS

In currency markets, the British pound fell below $1.27 for the first time since mid-January, hit by dollar strength and expectations that Prime Minister Theresa May will fail to persuade cabinet colleagues to back an amended version of her Brexit withdrawal deal.

The pound slipped 0.2% to $1.2688 while against the euro it was down 0.14% to a new four-month low of 87.88 pence,.

The U.S. dollar rose to 2-1/2 week highs, supported by some safe haven inflows, while Australia's top policymaker Philip Lowe said on Tuesday the central bank would consider the case for lower interest rates at its June policy meeting, pushing the Aussie dollar lower by half a percent to $0.6873.

Government bond yields in much of the euro zone stabilized above recent multi-year lows as investors remained cautious about selling fixed income against a backdrop of trade tensions and economic growth concerns.

Oil prices edged higher on U.S.-Iran tensions and amid expectations that producer club OPEC will continue to withhold supply this year. [O/R]

Brent crude futures, the international benchmark for oil prices, were at $72.31 per barrel at 1030 GMT, up 34 cents, or 0.5%, from their last close.

Global stocks gain as U.S. eases Huawei restrictions
 

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Comments (3)
Paul Dunne
Paul Dunne May 21, 2019 3:03AM ET
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NASDAQ -1.46; SZSE +1.76 and rising. Someone's shot themselves in the foot. There is no doubt that a company as technically advanced as Huawei can make their own chips and have their own developers keep abreast of Android.
zafer ilk
BulldozerInvst May 21, 2019 3:03AM ET
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problem is app store. no one will buy a phone without ios app store or google play store. ex: windows phone, amazon phone
Wei Shiaw
Wei Shiaw May 21, 2019 2:51AM ET
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To end the trade war, the only is trump admintration fall.
Mark Hoffman
Mark Hoffman May 20, 2019 10:58PM ET
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The determination of the U.S. administration to paralyze China's aspirations to become a technology super power is clear" - What? You are aware of forced technology transfers, right? The rampant intellectual property abuse of foreign companies by the Chinese? And the best way you characterize this whole situation is the big, bad ol' USA is trying to stifle China? Are you serious?
Zen Cat
LittleZenCat May 20, 2019 10:58PM ET
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I think, to be fair, the tech companies wanted to capitalize on the huge market in China and they handed the tech over willingly so they access to those dollars. Simply put, when you sign on the dotted line, you should know what your getting into. Complaining after agreeing to the terms is like being warned about a bad movie and watching it anyway, then coming out of the cinema in disgust.. Secondly, if they didn't hand it over willingly, some Chinese firms would have reversed engineered their products anyway. In this case they would have lost their IP without even getting anything back for it. At least this way they make big bucks.
tatson griffin
tatson griffin May 20, 2019 10:58PM ET
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the intellectual property abuse thing is obviously a lame reason for trade war. if you dont want transfer of technology. just dont deal with them. theres really nothing to complain about. donald obvously has other things in mind rather than complaining about intellectual property rights. before you figure out what his up to, he already got what he wants. thats just how good he is in manipulating everyone's mind. idol donald!!!
 
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