World markets were mostly firmer yesterday, with Wall Street leading the way, as fears about a China-US trade war were tempered by hopes the two sides will be able to come to an understanding, dealers said. The “consensus is back to believing there will be no trade war,” said Jasper Lawler, head of research at LCG. Most Asian and European equities exchanges rebounded somewhat, as trade war fears gave way to moderate investor optimism, or at least a wait-and-see stance.
“European markets are in a more optimistic mood today, with the focus shifting towards a more constructive end to the US-China stand-off,” said analyst Joshua Mahony at trading group IG. US stocks showed healthy gains in New York, paring — but not quite eliminating — Friday’s heavy losses. They plunged around 2% on Friday after Donald Trump warned of tariffs on an additional $100bn worth of Chinese imports, to which Beijing responded by saying it would stand firm.
The president’s announcement came weeks after his decision to tax imports of steel and aluminium, followed by planned levies on $50bn worth of goods from China over what Washington says is theft of intellectual property and technology. China retaliated by unveiling planned levies on $50bn worth of major US exports. Trump’s moves, part of his protectionist America First agenda, have rattled world markets, fearing a trade war between the world’s top two economies could reverse the tentative global recovery. “Much ink has been spilt over trade wars in the last few days, and we now wait to see what the Trump administration does next,” said Stephen Innes, head of forex trading for Asia Pacific at OANDA.
On Sunday, Trump tweeted that he saw an end to the dispute, saying: “China will take down its trade barriers because it is the right thing to do.” After the tweet, which LCG’s Lawler called ‘conciliatory’, investors will next be keeping a close eye on comments Tuesday by Chinese President Xi Jinping at the Boao Forum — dubbed the Asian Davos — to see if he comments on the brewing row. Chinese foreign ministry spokesman Geng Shuang yesterday told reporters that trade talks with the US were “impossible” under current conditions. Russian assets, meanwhile, tanked following a new round of US sanctions targeting President Vladimir Putin’s oligarch allies and their companies as well as senior officials.
Shares in Russian aluminium giant Rusal collapsed, losing nearly 50% in Hong Kong and putting the metals major at risk of defaulting on part of its debt. The rouble fell by over 3% against the dollar, while Moscow’s stock market indices also tumbled. In London, the FTSE 100 closed up 0.2% to 7,194.75 points; Frankfurt — DAX 30 ended up 0.2% to 12,261.75 points and Paris — CAC 40 rose 0.1% to 5,263.39 points yesterday.
Sources and photo-credits: Gulf Times