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Stock markets advance on trade truce hopes
LONDON, Sept 15, 2018 (BSS/AFP) – Stock markets rose Friday as investors
tracked developments in the drawn-out China-US trade talks, with glimmers of
hope that both sides will avoid a damaging escalation of trade conflicts,
dealers said.
There was “optimism lingering that the US and China could start another
round of trade talks”, said analysts at Charles Schwab.
At the end of a week dominated by monetary policy decisions, there was
also relief that central banks in emerging economies were actively helping
their currencies, after unexpectedly sizeable interest rate increases in
Turkey and Russia.
After a tumultuous start to the month, investors finally had something to
smile about after US Treasury Secretary Steven Mnuchin on Thursday invited
Chinese officials for fresh talks to avert an all-out trade war.
– Breathing space –
The news provided some much-needed support, as did data showing US
consumer price inflation slid in August, easing pressure on the Federal
Reserve to tighten borrowing costs.
Wall Street stocks rose modestly following a mixed retail sales report and
as investors eyed increasing US Treasury bond yields, and key European
markets were solidly up at the closing bell.
While the US central bank is expected to lift rates next month, the
figures lower the chances of another such move before January — providing
support to equities on Wall Street.
It also gave some breathing space to emerging markets, which have been
battered in recent weeks by fears of contagion from crises in Turkey,
Argentina and South Africa.
“Hope springs eternal for emerging markets anytime the US dollar weakens,”
said Stephen Innes, head of Asia-Pacific trading at Oanda trading group.
The dollar, however, recovered throughout Friday’s session.
On trade, Hannah Anderson, global market strategist at JP Morgan Asset
Management, warned against being too hopeful, with the US still considering
imposing tariffs on $200 billion of Chinese imports.
“Markets need to separate trade rhetoric and trade actions,” she said.
– Rhetoric –
“While heated rhetoric may contribute to the shifting investor
expectations we have seen this week, there has been no fundamental change in
the state of the US-China trade dispute,” Anderson added.
The Chinese economy meanwhile revealed fresh signs of softness Friday,
with data showing the pace of investment slowing to record lows, while retail
spending and industrial production stabilised.
Beijing faces a delicate balancing act, aiming to shift its growth driver
away from investment and exports towards personal consumption, while at the
same time battling a mountain of debt.
BSS/AFP/HR/0940