ZCZC
BCN-16
EUROPE-MARKETS
European stocks pulled higher by Trump trade talk
LONDON, Jan 11, 2019 (bss/AFP) – European and US stocks pivoted higher on
Thursday as President Donald Trump stoked investor optimism over talks to end
the US-China trade war.
Discussions between US and Chinese officials to find a way out of an
impasse that has seen the world’s top two economies impose tariffs on
hundreds of billions of goods and imperil global growth have fuelled gains in
recent days.
But the lack of substantive information at the end of the three days of
talks gave investors the jitters, and stocks pulled back in Asia, as well as
most of European trading and at the open on Wall Street.
However fresh comments by the US president helped bring about a return of
optimism, said market analyst Joshua Mahony at online trading firm IG.
“Trump’s claim that the US is having ‘tremendous success’ in talks with
China should be taken with a pinch of salt, yet to some extent the fact that
talks have sustained this long without breaking down highlights a shift in
tactics by both sides,” he said in a note to clients.
Stocks picked off their lows, with most leading US and European indices
moving into positive territory, at least temporarily.
In Europe, London finished the day up 0.5 percent, followed by Frankfurt
with a gain of 0.3 percent. Paris closed 0.2 percent lower, after having
traded considerably lower during the afternoon.
The Dow was flat as European exchanges closed, while the S&P 500 and
Nasdaq Composite were both down less than a tenth of a percentage point.
– Fed patience –
Market gains in recent days have also been fueled by the US Federal
Reserve taking a distinctly softer tone on interest rate hikes.
Fed boss Jerome Powell said last week that there was no “pre-set” plan on
rates, triggering a global stocks rally. The Fed had previously been expected
to continue raising interest rates in 2019, and concerns about rising
borrowing costs sapping growth was a key factor in driving equities lower
late last year.
Minutes from the latest Fed policy meeting released on Wednesday showed it
was happy to ease the pace of rate hikes to prevent a slowdown in the
economy.
US central bankers said they “can afford to be patient” owing to low
inflation and uncertainty about the outlook. While there would likely be more
increases in borrowing costs, they said it would be a “relatively limited
amount”.
The comments sparked a dollar sell-off in Asia, with the greenback
weakening across the board and the Chinese yuan moving to its highest level
against the greenback since late August.
BSS/AFP/HR/0955