Breaking News
0

China-U.S. trade sends world stocks, emerging markets surging

Stock MarketsDec 03, 2018 05:11AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The German share price index, DAX board, is seen at the stock exchange in Frankfurt

LONDON (Reuters) - A truce between U.S. and Chinese leaders on trade tariffs provided boosted global markets on Monday, fuelling a nearly one percent surge on world stocks and pushing emerging currencies higher against the dollar.

European share benchmarks opened sharply higher, with Germany's DAX (GDAXI) - the most sensitive to China and trade war fears - leading the way with a 2.5 percent rise to its highest level since Nov. 14, and Wall Street too was set for a stronger session.

The gains came after China and the United States agreed at the weekend to halt additional tariffs on each other. The deal prevents their trade war escalating as the two sides try to bridge differences with fresh talks aimed at reaching a deal within 90 days.

U.S. President Donald Trump also said "China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40 percent". That helped boost European autos more than 4 percent (SXAP).

"We have a deal. That's wonderful news for global financial markets and signaling the start for a year-end rally in risky assets," said Bernd Berg global macro strategist at Woodman Asset Management.

"We are going to see a rally in emerging market and U.S equities, EM currencies and China-related assets like Australia. I expect the rally to last until year-end."

MSCI's all-country world index (MIWD00000PUS) climbed 0.9 percent in its sixth straight day of gains and hit its highest level since Nov. 9. Emerging equities (MSCIEF) rose 2.1 percent and were set for their strongest day in a month.

Asian shares kicked off the gains, with Chinese mainland markets (CSI300) (SSEC) rising more than 2.5 percent while Japan's Nikkei (N225) gained as much as 1.3 percent to a six-week high.

The risk-on mood drove the U.S. dollar 0.4 percent lower against a basket of currencies (DXY) while against the euro it slumped 0.6 percent (EUR=EBS).

The greenback has already come under some pressure from the recent subtle shift in the U.S. Federal Reserve's policy communication to a slightly more dovish stance. Comments by Federal Reserve Chair Jerome Powell were interpreted by markets as hinting at a slower pace of rate hikes.

Powell was scheduled to testify on Wednesday to a congressional Joint Economic Committee but his hearing is expected to be postponed to Thursday because major exchanges will be closed on Wednesday in honor of former U.S. President George H.W. Bush, who died on Saturday.

Florian Hense, economist at Berenberg, said the market rally would not bring a return to a more hawkish Fed stance.

"We would need to see some rebound in economic activity to lift expectations of more rate hikes," he said.

The Powell comments had sent U.S. Treasury yields lower but they pulled back from the over two-month lows hit on Friday as 10-year yields rose three basis points to 3.04 percent (US10YT=RR).

Germany's 10-year government bond, the benchmark for the euro area, was set for its biggest one-day yield jump in a month, rising four basis points to a high of 0.347 percent (DE10YT=RR). Yields on riskier southern European bonds fell across the board, with Italian yields down around 10 bps to new two-month lows. (IT5YT=RR), (IT10YT=RR).

Emerging currencies were among the main beneficiaries of dollar weakness, with an MSCI index up 0.6 percent <.MIEM00000PUS>. It was led by China's yuan which rose one percent for its biggest daily gain since Feb. 2016 .

"Such positive sentiment won't fade very soon ... (the 90-day) period is not short, it's long enough to soothe market sentiment," said a trader at a foreign bank in Shanghai.

Elsewhere, oil soared more than five percent, a positive start after it had posted its weakest month in more than 10 years in November, losing more than 20 percent as global supply outstripped demand.

(The story fixes lead to read 'against,' not across)

China-U.S. trade sends world stocks, emerging markets surging
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
Patrick Mueller
Patrick Mueller Dec 02, 2018 10:29PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
#ThoughtsAndPrayers
Reply
1 1
Eden Huang
Eden Huang Dec 02, 2018 7:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Drop based on trade dispute? Bounce based on no trade dispute?
Reply
4 0
Suman Jutur
Suman Jutur Dec 02, 2018 6:37PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
bounce based on no substance.
Reply
2 1
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email