Global stocks regain footing after slump

Despite raging trade war, Europe shares up 0.7% as the dollar hits 6-month high against yen, euro steady

Stock markets regained some poise yesterday, having suffered wild tailspins in the previous session as the United States ratcheted up trade war threats on China.

A 2 per cent rebound on China’s big bourses had steadied Asian nerves, Wall Street futures were pointing higher and oil markets clawed back some of Wednesday’s 7 per cent slump that had marked their worst day in 2-1/2 years.

Beaten-up industrial metals including copper and nickel pulled higher, as did European stocks, while there was even some relief for Turkey’s lira after it had been dumped to a record low by talk of interest rate cuts from its re-elected President Tayyip Erdogan.

“It mostly seems to be relief after the all-red, riskoff day yesterday,” said Rabobank strategist Bas Van Geffen.

“The basis for this is not entirely clear to me though, because it doesn’t seem like this [US threat of tariffs on another $200 billion of goods]has actually restarted negotiations with China ... In fact I would argue that it has made the risk of an accident or an unwanted outcome bigger.” Europe’s moves were less pronounced

ICE Brent Crude –3.64% than Asia’s had been, perhaps reflecting that caution.

The Shanghai Composite and blue-chip CSI300 indexes had both ended the day up 2.2 per cent. Shares in Japan, Australia and Hong Kong closed 1.1, 1 and 0.6 per cent higher respectively.

The pan-European STOXX 600 managed a more modest 0.5 per cent, with gains in the health care and consumer sectors offset by minor losses in the banking sector and in energy firms after the dramatic drop in oil prices.

Wall Street

In the US, technology and industrial stocks led Wall Street higher as some big deals and optimism about the earnings season helped offset fears about a US-China trade war.

Nine of the 11 major S&P sectors were higher, led by the S&P 500 technology sector’s 1 per cent gain. The industrial sector rose 0.6 per cent.

At 10:05am EDT the Dow Jones Industrial Average was up 169.07 points, or 0.68 per cent, at 24,869.52, the S&P 500 was up 14.72 points, or 0.53 per cent, at 2,788.74 and the Nasdaq Composite was up 55.48 points, or 0.72 per cent, at 7,772.09.

The dollar rose to a sixmonth high against the Japanese yen of 112.60 after US inflation data that bolstered the case for more Federal Reserve rate hikes this year.

The gap between 10-year US Treasuries and equivalent German Bund yields is the widest in nearly 30 years at 2.59 per cent.

ICE WTI Crude –3.76%