World stocks climb on hopes of trade truce
Markets focus on the possibility of a Us-china trade deal at the upcoming G20 summit
LONDON: Hopes for a thaw in Uschina trade ties at the upcoming G20 summit helped world shares inch to a one-week high on wednesday, though fears of a no-deal outcome weighed on European bourses and kept the dollar firm for the fourth day in a row.
While President Donald Trump talked tough on the trade tariffs issue ahead of a meeting with chinese president Xi Jinping on Saturday, markets focused on comments by White House economic adviser Larry Kudlow, who held open the possibility that the two countries would reach a trade deal.
A rapprochement is seen as crucial, given that world growth and trade are already showing signs of an alarming slowdown.
Kudlow’s comments allowed Chineseand japanese shares to rally 1 per cent while MSCI’S all-country equity index was up 0.15 per cent and the pan- european benchmark rose 0.2 per cent. Futures indicated a firm opening on Wall Street, with the S&P500, Nasdaq and Dow Jones tipped to rise between 0.3-0.5 per cent.
There was some caution, however, especially in Europe, which was hit on Tuesday by a report that Trump may soon decide about new taxes on imported cars. Europe’s auto sector shares were 0.3 per cent in the red.
With the currency index approaching 1-1/2-year highs reached earlier this month, traders are focusing on a speech at 1700 GMT by Federal Reserve Chair Jerome Powell to see if he offers clues on how many more times the Fed could raise interest rates.
While Fed Vice Chair Richard Clarida took a less dovish stance on Tuesday than some had expected and backed more rate rises, Powell and his colleagues have in recent weeks alluded to global volatility, leading many to speculate the bank’s threeyear-long rate rise campaign could pause in 2019. However most reckon the Fed is on track to tighten policy in December and early-2019 at least.
Sterling climbed off two-week lows to rise 0.4 per cent by 1215 GMT, having touched a session-high of $1.2806 after the opposition’s main finance spokesman John Mcdonnell said he could accept a second Brexit referendum.
Against the euro it rose half a per cent to touch a high of 88.105 pence Mcdonnell’s comments raise hopes that the Labour Party will more firmly back putting the Brexit issue to a second vote, should Prime Minister Theresa May fail to convince sceptical lawmakers of the benefits of her Brexit deal ahead of a December 11 parliamentary vote.