Stocks rally on Chinese data boost, cautious trade optimism

Published 02/12/2019 in Business News, Economy & Finance

Stocks rally on Chinese data boost, cautious trade optimism

LONDON (Reuters) – Stock markets rebounded on Monday as decent manufacturing data in China and renewed optimism over a trade deal eroded some of the jitters which emerged among investors last week.

The recovery in Europe followed gains in Asia, where share prices again approached record highs as investors stuck with bets that a trade deal between the United States and China is imminent, something which has fueled the rally in asset prices in recent weeks.

Last week’s decision by U.S. President Donald Trump to sign legislation backing protesters in Hong Kong initially rattled markets, with worries it will unravel progress made in talks between Beijing and Washington.

But investors are nonetheless sticking with the broad view that a further escalation in the trade war can be avoided.

The MSCI world equity index .MIWD00000PUS, which tracks shares in 47 countries, edged up 0.1 percent and was close to last week’s highs.

In Europe, the Euro STOXX 600 rose 0.26 percent while the German DAX .GDAXI was 0.23 percent higher. French .FCHI and British .FTSE shares were also climbing.

Graphic: World FX rates in 2019 (JPY=EBS, its strongest against the safe-haven currency since May.

Currency markets were largely quiet elsewhere, with the euro little changed at $1.1016 EUR=EBS.

Investors have long thought that the United States will avoid imposing an additional 15 percent tariff on about $156 billion of Chinese products on Dec. 15 after signing a deal with China.

But the two countries have been so far unable to bridge the gap over existing tariffs on Chinese goods, with Beijing demanding the scrapping of them as a part of any trade deal.

“It looks a bit difficult for two countries’ leaders to shake hands and sign a deal this month. What is more likely is to essentially kick the can, with China buying more U.S. farm products while the U.S. postpones its next tariffs,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.

“Markets will consider such an arrangement as a de facto deal whether they officially sign it or not,” he said.

Oil prices recovered slightly after a big slump on Friday on record high U.S. crude production. Expectations that OPEC and its allies are set to extend existing oil output cuts when they meet this week helped drive the rebound.

Brent crude LCOc1 futures rose 1.21 percent to $61.22 a barrel while U.S. West Texas Intermediate crude CLc1 gained 0.85 percent to $56.02 per barrel.

Graphic: MSCI world stocks index (here)

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