Stocks under pressure as US-China trade talks begin

A visitor

A visitor looks at a ticker of share prices at the London Stock Exchange. The FTSE 100 closed 0.1% up at 7,197.01 points yesterday.

Stock markets were under pressure yesterday as traders anxiously awaited news from high-level US-China trade talks under way in Beijing. European indices, which had gained ground earlier, had mostly slipped into the red by the close, and Wall Street was also lower in the late morning in New York. London, however, managed to eke out a small closing gain thanks to pound weakness which boosts earnings of FTSE-listed multinationals with much income in other currencies. The FTSE 100 closed 0.1% up at 7,197.01 points, Frankfurt’s DAX 30 ended 0.7% down at 11,089.79 points and Paris’ CAC 40 finished 0.2% down at 5,062.52 points, while the EURO STOXX 50 lost 0.6% at 3,182.66 points.

Earlier, Asian markets had already dropped as traders reacted to a batch of mixed earnings updates. In company movement, shares in Airbus jumped in Paris after the European plane maker said it would stop building its A380 owing to poor demand for the superjumbo. The announcement was made alongside news that Airbus net profit soared 29% in 2018 on strong demand for its smaller planes. David Madden, analyst at CMC Markets UK, said strong Chinese trade data bode well for talks with the US. “That fact that China’s economy is showing some signs of improvement might mean Beijing will be less susceptible to pressure from the US regarding the trade dispute,” he said.

Negotiators have kicked off discussions in the Chinese capital aimed at defusing a row that has already triggered tariffs on billions of dollars’ worth of exports and threatened to stymie global growth. Failure to resolve the dispute would initiate a sharp hike in US tariffs on $200bn of Chinese goods, although US President Donald Trump indicated this week he could extend his March 1 deadline if progress is made. Trump told reporters in the Oval Office on Wednesday that preliminary discussions in Beijing had gone “very well”, Bloomberg reported, adding that the US president was considering a 60-day deadline extension according to unnamed sources.

“Based on the positive signals from the US-China trade negotiations, further tariff hikes will likely be suspended,” noted Louis Kuijs of Oxford Economics, as US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met with China’s top economic czar Liu He.China’s trade surplus with the US narrowed in January even as its American imports plunged, buffeted by a slowing economy and the tariff battle with Washington, official data showed yesterday. The surplus fell to $27.3bn from $29.9bn in December.

Sources and photo-credits: Gulf Times, AFP