European stock markets surge as Trump hints at trade breakthrough

European stock markets surge as Trump hints at trade breakthrough

London Stock Exchange (LSE)

LONDON: European stock markets rose on Thursday (Oct 10), jolted into action by a Donald Trump tweet offering a glimmer of hope for quick success in US-China trade talks, traders said.

The US president said he would on Friday meet with China's trade envoy who had been expected to leave town on Thursday, they said.

"Earlier reports that he would leave this evening were taken to suggest no agreement would be reached but this goes against that school of thought and is clearly buoying sentiment," said David Cheetham at XTB.com.

This "hinted at a possible market-friendly outcome to the latest round of meetings between the world's two largest economies", he said.

European stock markets, which had been going nowhere until the President took to Twitter, all closed higher in response.

On Wall Street, the Dow Jones index was also well in the green by the late New York morning.

"US stocks have turned higher, with optimism of some sort of progress on the trade front appearing to resurface," said analysts at Charles Schwab.

Investors had been broadly upbeat in recent weeks that the meeting in Washington would see at least some progress.

But then Hong Kong's South China Morning Post reported pre-meeting discussions had not made any progress in key areas that the meet would be cut in half to just one day.

POUND SPIKES ON BREXIT HOPES

The oil price recovered as hopes for a trade deal also boosted the outlook for economic growth, and therefore demand for crude.

Meanwhile, in foreign exchange markets, the pound spiked after British Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar said they could see a route towards striking a possible Brexit divorce deal, following a crunch meeting on Thursday.

"Both continue to believe a deal is in everybody's interest. They agreed that they could see a pathway to a possible deal," the pair said in a joint statement.

Market participants saw the statement as surprisingly confident, and some felt it could be pointing to a real chance that a no-deal Brexit, the nemesis of financial markets, could yet be avoided.

"The announcement is decidedly upbeat in its tone and while it stops well short of suggesting a deal is imminent it has been warmly welcomed in the markets," said XTB's Cheetham.

There is still a lot of uncertainty ahead, independent economist Julian Jessop told AFP.

But "markets clearly think a deal is potentially back on again, boosting sterling", he said.

Key figures around 1540 GMT:

London - FTSE 100: UP 0.3 per cent at 7,186.36 points (close)

Paris - CAC 40: UP 1.3 per cent at 5,569.05 (close)

Frankfurt - DAX 30: UP 0.6 per cent at 12,164.20 (close)

EURO STOXX 50: UP 0.9 per cent at 3,493.96

Tokyo - Nikkei 225: UP 0.5 per cent at 21,551.98 (close)

Hong Kong - Hang Seng: UP 0.1 per cent at 25,707.93 (close)

Shanghai - Composite: UP 0.8 per cent at 2,947.71 (close)

Euro/dollar: UP at US$1.1019 from US$1.0971 at 2100 GMT

Dollar/yen: UP at 107.96 yen from 107.48 yen

Pound/dollar: UP at US$1.2305 from US$1.2206

Euro/pound: DOWN at 89.56 pence from 89.89 pence

Brent North Sea crude: UP 1.0 per cent at US$58.87 per barrel

West Texas Intermediate: UP 1.4 per cent at US$53.30 per barrel

Source: AFP/de

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