World Stocks mixed amid Turkey jitters, eyes US-China deal
NEW YORK: Wall Street stocks finished higher on increased hopes of a resolution of the US-China trade impasse, while European stocks were pressured by worries over Turkey.
US stocks, which were negative much of the morning, rallied following a midday Wall Street Journal report that Washington and Beijing were taking steps to try to resolve a trade dispute ahead of a November summit between US President Donald Trump and Chinese leader Xi Jinping. The S&P 500 finished up 0.3 percent. “Clearly the market rallied after that Wall Street Journal report,” said Karl Haeling of LBBW. “At the same time though, the market did not rally that much.” “The lack of details prevented a bigger rally,” he added. “There’s still a lot of uncertainty about what all this means.” The article added to positive sentiment after both sides on Thursday confirmed a resumption of talks, even though both parties are still expected to enact fresh tariffs next week. “Markets are optimistic but remain wary,” said FXPro analyst Alexander Kuptsikevich.
Turkish lira tumbles
Meanwhile, a rebound in the Turkish lira was cut short by new threats by Ankara and Washington to impose more sanctions as the dispute over a jailed American pastor shows no sign of being resolved. The ratings agency S&P on Friday also downgraded Turkish sovereign debt for the second time in four months, predicting a recession in 2019. Meanwhile, European and US stocks rebounded as news that Beijing and Washington would hold trade talks overshadowed lingering worries over Turkey.
Chinese officials announced they would send a senior negotiator to the United States in late August to resume trade talks, the first publicly announced meeting on the escalating dispute in weeks. US officials also confirmed the talks.
Traders saw a glimmer of hope of an easing in the trade battle that has seen the two sides hit each other with reciprocal tariffs on goods worth $34 billion, although the negotiations will be between lower ranked officials than in previous cases.
“The stakes are now lower, without the big brass physically present at the table,” Pantheon Macroeconomics said in a note. “But in a way, this could enable the talks to proceed favorably, with lower-level officials thrashing out a deal on which higher-level talks could be based.”
Frankfurt, London and Paris clawed back much of their losses of more than 1.5 percent the previous day on Turkey fears and Chinese growth concerns.