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Stock market rally falters as trade doubts resurface
LONDON, Nov 20, 2019 (BSS/AFP) – A stock market rally ran out of steam on
Tuesday as doubts about the chances for an early partial US-China trade deal
returned, prompting a bout of profit-taking.
Market speculation is focused on the possibility of a so-called mini or
‘phase one’ deal, with optimists hoping it is imminent.
But sceptics have noted such a partial pact hinges on US President Donald
Trump rolling back existing tariffs on China, something he appears unwilling
to do.
Media reports say this stance may be a dealbreaker for China.
The optimism that earlier Tuesday lifted European and US stocks was now
“waning a bit due to uncertainty regarding if the US is willing to roll back
tariffs to close the deal”, said analysts at Charles Schwab.
But despite Tuesday’s market consolidation, underlying optimism about the
trade situation remained intact.
The US and China were “now widely seen as de-escalating tensions with a
phase one agreement”, said David Cheetham, chief market analyst at trading
group XTB.
World equities have been underpinned in recent weeks by optimism that the
world’s top two economies will eventually hammer out a mini trade deal as
part of a wider agreement.
At the close, European stocks were mixed after giving up most or all of
their earlier gains, while on Wall Street the Dow index was slightly softer
in the late New York morning.
– Making sense of it all –
“Investors have little option but to keep pace with the rapid shifts on
the US-China phase-one deal, attempting to make sense of the many comments —
official and from press ‘sources’ — on whether a rollback was now genuinely
on the table,” said Stephen Innes at AxiTrader. “Ultimately they remain
hostage to these developments.”
Earlier, Hong Kong’s main stocks index extended Monday’s rally with
another surge but continuing protests in parts of the city — particularly a
violent standoff at a university — remained a source of worry.
The gains come as the widespread protests that hammered the city’s
transport network last week appear to have become less disruptive over the
past two days.
Oil prices were sharply down by the end of the European trading day, as
trade pessimism took hold.
“The less than promising reports coming from China on the trade war may
have taken some of the energy out of the rally but oil is already trading at
quite elevated levels and in a region that has previously been problematic,”
said Craig Erlam at Oanda.
The pound, meanwhile, retreated after strong gains Monday seen on
expectations UK Prime Minister Boris Johnson’s ruling Conservative party will
win next month’s general election with a healthy majority, helping him to
push through his Brexit deal.
BSS/AFP/HR/1025