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Stocks rise on hopes US-EU may avoid trade war escalation
NEW YORK, July 6, 2018 (BSS/AFP) – Stocks rose on both sides of the
Atlantic Thursday as investors entertained a glimmer of hope that
negotiations may yet soften the blow of an unfolding trade war between
Washington and the European Union, dealers said.
Still, the gains came despite no sign of detente between Beijing and
Washington, as tit-for-tat tariffs as set to take effect at midnight.
European car stocks surged after the US ambassador in Berlin, Richard
Grenell, told bosses of Germany’s biggest car firms that Washington was
calling on the EU to bring tariffs to zero on car imports — in exchange for
equal treatment by the US. The US is studying the possibility of imposing
tariffs on autos on national security grounds.
European auto sector concerns were “easing a bit to boost the markets in
Europe,” Charles Schwab analysts said after German Chancellor Angela Merkel
indicated she would back talks with trading partners on lowering automobile
tariffs.
In Milan, Fiat Chrysler stock gained more than five percent and in Paris,
Peugeot and Renault were three percent or more higher.
German auto shares also rose across the board, with BMW up more than one
percent, while Daimler and Volkswagen added more than two percent on the day.
On Wall Street, as traders returned to their desks after Wednesday’s
national holiday, markets reacted to solid US employment data, which offset
worries about trade tensions.
US auto giants General Motors and Ford both gained, along with large
technology names including Facebook and Google-parent Alphabet.
– ‘No choice but to fight’ –
But analysts were quick to point out that the bigger trade war — between
the US and China — is still happening as Washington is set to begin
enforcing tariffs on nearly $34 billion in Chinese imports Friday.
Beijing has vowed to respond with its own tariffs immediately, arguing it
has “no choice but to fight” and accusing Washington of “opening fire on the
whole world” with the trade restrictions.
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Greg McKenna, chief market strategist at AxiTrader, said “there has been a
subtle but distinct shift in the number of voices who are now saying this
could all end up in a big global mess with a huge hit to global growth”.
But Thursday’s gains suggest “perhaps that the tariff action has been
priced in already and that market participants still don’t think a full-
fledged trade war will break out on the other side of it,” said Briefing.com
Still, the website noted subsequently that “that perception could shift on
the next headline.”
Elsewhere, oil prices traded lower after US data showed a surprise
increase in oil stockpiles and Saudi Arabia cut prices for crude sent to
Asia.
The retreat also came after Trump called on OPEC to reduce prices.
– Key figures around 2100 GMT –
New York – Dow: UP 0.8 percent at 24,356.74 (close)
New York – S&P 500: UP 0.9 percent at 2,736.61 (close)
New York – Nasdaq: UP 1.1 percent at 7,586.43 (close)
London – FTSE 100: UP 0.4 percent at 7,603.22 (close)
Frankfurt – DAX 30: UP 1.2 percent at 12,464.29 (close)
Paris – CAC 40: UP 0.9 percent at 5,366.32 (close)
EURO STOXX 50: UP 0.9 percent at 3,441.11 (close)
Tokyo – Nikkei 225: DOWN 0.8 percent at 21,546.99 (close)
Hong Kong – Hang Seng: DOWN 0.2 percent at 28,182.09 (close)
Shanghai – Composite: DOWN 0.9 percent at 2,733.88 (close)
Euro/dollar: UP at $1.1689 from $1.1657 at 2100 GMT Wednesday
Pound/dollar: DOWN at $1.3220 from $1.3230
Dollar/yen: UP at 110.64 yen from 110.49 yen
Oil – Brent Crude: DOWN 81 cents at 77.39 per barrel
Oil – West Texas Intermediate: DOWN $1.20 at 72.94 per barrel
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