Global stocks edge higher on Brexit hopes

Global stocks edged higher on Tuesday yet safe havens were still in play as markets tried to balance fading optimism over the latest China-U.S. trade truce with the likelihood of a Brexit deal by Thursday’s European Union summit.

MSCI’s gauge of stocks across the globe gained 0.2% with European stocks climbing briefly to a two-week high after comments from the European Union’s chief Brexit negotiator that a deal with Britain over the terms of their divorce was still possible this week.

The pan-European STOXX 600 added 0.2% with France’s CAC and Germany’s export-oriented both rising while Britain’s FTSE was a touch lower as sterling rose against the dollar and the euro, reflecting the cautious optimism about talks between Britain and the EU. Yet capping broader gains in equities was a perceived lack of progress coming out of U.S.-China trade negotiations.

Reports of a “Phase 1” trade deal between the United States and China last week had earlier cheered markets but the dearth of details around the agreement has since curbed this enthusiasm with oil prices extending declines, Chinese stocks weaker and the safe-haven yen holding gains versus dollar.

The focus is now firmly on Europe where officials from Britain and the EU will meet at a makeor-break summit on Thursday and Friday that will determine whether Britain is headed for a deal to leave the bloc on the 31 October, a disorderly no-deal exit or a delay.

The main sticking point remains the border between EU member Ireland and Northern Ireland, which belongs to Britain. Some EU politicians have expressed guarded optimism that a deal can be reached. However, diplomats from the EU have indicated they are pessimistic about British Prime Minister Boris Johnson’s proposed solution for the border and want more concessions.

Yet those concerns did little to quash market optimism for now, with Britain expected to make new proposals on Tuesday.