New York — Optimism over signs that China and the United States will start working to resolve their trade dispute helped most stock markets across the world move higher on Monday.
“Equity markets are buoyant ahead of the US-China trade talks which commence on Wednesday,” said market analyst David Madden at CMC Markets UK.
The talks slated for Wednesday and Thursday are the first since the US and China began striking out with tariffs on tens of billions of dollars’ worth of goods, and according to the Wall Street Journal they are aimed at easing the dispute so US President Donald Trump and Chinese President Xi Jinping can hold a summit in November.
The talks come even as President Donald Trump’s administration continues to push forward on additional tariffs, including a round of new levies on $16 billion in Chinese goods expected to take effect Thursday, while another $200 billion are under consideration.
“Investors will be hoping that negotiations between China and the US can start to break the trade tariff deadlock or at the very least open the door to a summit between President Trump and President Xi, which might begin to ease the pressure,” said Rebecca O’Keeffe, head of investment at Interactive Investor.
London closed the day 0.4 percent higher, with Paris adding 0.7 percent and Frankfurt climbing 1.0 percent.
US indices won more modest gains, with the broad-based S&P 500 advancing 0.2 percent to 2,857.05, bringing it within about 15 points of its January all-time high.
The dollar pulled back against the euro and other major currencies following Trump’s renewed criticism of the Federal Reserve’s interest rates increases.
In Asia, Hong Kong and Shanghai closed more than one percent higher, but Tokyo fell 0.3 percent.
Greg McKenna, chief market strategist at AxiTrader, pointed out that Beijing, which is struggling to support the economy while also addressing a debt mountain, may have had a “lightbulb moment” last week with the release of more weak data and a sharp drop in the troubled yuan.
Authorities in China appeared to be moving to support the yuan last week as it headed towards seven to the dollar, its weakest level since January 2017.
Some observers have suggested the central bank has been letting the yuan soften in recent weeks to offset the effects of any US tariffs, a claim China has denied.
Trump in an interview with Reuters said, “I think China’s manipulating their currency, absolutely. And I think the euro is being manipulated also.”
Elsewhere Monday, the Turkish lira was hovering above six to the dollar, well off the record levels around seven seen last week but still facing pressure after Ankara and Washington traded fresh sanctions threats as the row over a detained American pastor drags on. — AFP