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Stocks rise as trade war rhetoric seems to soften
LONDON, 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 EU,
dealers said.
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.
European auto sector concerns were “easing a bit to boost the markets in
Europe”, observed analysts at Charles Schwab, after German Chancellor Angela
Merkel responded by saying 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 in closing trade.
German auto shares also rose across the board, with BMW up more than one
percent, while Daimler and Volkswagen both added over two percent on the day.
This, combined with strong German economic data, made the Dax index in
Frankfurt Europe’s star performer.
The Paris and London stock markets also rose.
Wall Street was higher as traders returned to their desks after Wednesday’s
national holiday and reacted to solid US employment data, which offset
worries about trade tensions, as well as a possible lessening of tension
between Washington and the EU.
– ‘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 more than $34 billion (29 billion euros) in Chinese
imports from Friday.
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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.
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”.
In Europe meanwhile, official data showed German industrial orders bounced
back in May after a string of setbacks, suggesting Europe’s largest economy
may not face the sharp slowdown some observers feared.
Thursday’s positive data was “more evidence that the economy could rebound
during the second half of the year”, ING Diba bank economist Carsten Brzeski
commented.
The euro gained after the data.
– Oil prices lower –
Elsewhere, oil prices traded lower after Trump fired a warning shot at
OPEC.
“The OPEC Monopoly must remember that gas prices are up & they are doing
little to help,” Trump tweeted, adding: “REDUCE PRICING NOW!”
Oil prices have been on an upward trend as Saudi Arabia struggles to offset
supply disruptions around the world including in OPEC and non-cartel
producing countries.
A surprise rise in US oil inventories reported Thursday also weighed on
prices, dealers said.
BSS/AFP/HR/1030