Skip to main content

Advertisement

Advertisement

Business

Trade deal optimism shines on European stocks

Trade deal optimism shines on European stocks

Logo of the London Stock Exchange.

LONDON: Stock markets mostly climbed on Tuesday (Aug 28), with Wall Street pushing higher again the day after setting records following a trade deal between the United States and Mexico.

Equities had already been enjoying a run-up after Federal Reserve boss Jerome Powell last week indicated that the US central bank would not aggressively raise interest rates.

"US stocks are adding to a recent run in early action that has the markets back in record high territory, with the global markets finding support from yesterday's bilateral trade agreement between the US and Mexico, which appeared to alleviate some of the festering uneasiness," said analysts at Charles Schwab brokerage.

In opening trade, the S&P broke through the 2,900-points level for the first time ever, while the Nasdaq Composite also blew by the intraday record it set the day before.

The Dow was 0.2 per cent higher in late morning deals.

In Europe, London closed 0.5 per cent higher, while Paris added 0.1 per cent. Frankfurt bucked the trend, ending the day down nearly a tenth of a percentage point after having spent most of the day in the green.

The US-Mexico agreement raises hopes that the wider North American Free Trade Agreement which also includes Canada and was rejected by the White House soon after US President Donald Trump's election, can be salvaged after Canada rejoins talks on Tuesday.

Analyst Patrick O'Hare at Briefing.com said that it is still unclear whether a three-way deal with Canada can be reached by the end of the week as needed, or whether the US Congress would approve a bilateral deal with Mexico.

"For now, market participants seem to be content knowing something got done at least with Mexico," he said in a note to clients.

Mizuho Securities said in a note to clients that investors are monitoring "the US-Canada negotiations ... and the impact on US-China trade talks".

Monday's agreement comes after officials from Washington and Beijing last week held talks aimed at easing trade tensions that have seen them hit each other with tariffs on tens of billions of dollars worth of goods.

'FESTIVE MOOD'

While the meeting did not achieve any breakthrough, the fact it took place at all was seen as a good sign.

Stephen Innes, head of Asia-Pacific trading at OANDA, said dealers were "in a festive mood" as the Mexico deal removed "one major hurdle that has been haunting North American investors for months".

He added: "Markets are revelling in any trade positives ... After all, a deal is a deal."

However, Trump appeared to temper expectations for a fresh round of talks with China, saying after announcing the new pact that "it's just not the right time to talk right now" before adding: "eventually, I'm sure that we'll be able to work out a deal".

In foreign exchange trading, Turkey's lira weakened to around 6.25 against the dollar, with dealers continuing to fret over the country's financial crisis.

The pound slid after Prime Minister Theresa May indicated that a no-deal Brexit would not be a disaster for Britain, playing down warnings of serious consequences for the UK economy.

It later rebounded briefly following a report from the Evening Standard newspaper that Mark Carney had been approached about staying on another year as head of the Bank of England following the end of his term in June 2019.

"For me the Carney news (if true) is sterling positive," said James Hughes, chief market analyst at AxiTrader, in a tweet.

Key figures around 1530 GMT:

 

New York - Dow Jones: UP 0.2 per cent at 26,094.56 points

New York - S&P 500: UP 0.1 per cent at 2,899.36

New York - Nasdaq: UP 0.2 per cent at 8,030.46

 

London - FTSE 100: UP 0.5 per cent at 7,617.22 (close)

Frankfurt - DAX 30: DOWN 0.09 per cent at 12,527.42 (close)

Paris - CAC 40: UP 0.1 per cent at 5,484.99 (close)

EURO STOXX 50: DOWN 0.02 per cent at 3,455.37

 

Tokyo - Nikkei 225: UP 0.1 per cent at 22,813.47 (close)

Hong Kong - Hang Seng: UP 0.3 per cent at 28,351.62 (close)

Shanghai - Composite: DOWN 0.1 per cent at 2,777.98 (close)

 

Euro/dollar: UP at US$1.1716 from US$1.1680 at 2100 GMT

Pound/dollar: DOWN at US$1.2880 from US$1.2895

Dollar/yen: UP at 111.14 yen from 111.07 yen

 

Oil - Brent Crude: UP 19 cents at US$76.40 per barrel

Oil - West Texas Intermediate: UP two cents at US$68.89 per barrel

Source: AFP/de

Advertisement

Also worth reading

Advertisement