Global Stocks Rise as White House Signals Flexibility on Trade Talks

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02/20/2019 | 10:18 am


By David Hodari



Global stocks rose on Wednesday, as the White House continued to soften its position on trade with China.



In Europe, the pan-continental Stoxx Europe 600 index climbed 0.2% in the opening minutes of trading, buoyed by its basic-resources sector after Glencore released its corporate earnings for 2018.



Shares in the mining giant were up 2.4% after the company said it would cap its coal production and confirmed The Wall Street Journal's reports that it plans to curb production at one of its biggest copper and cobalt mining operations in Congo. Other big miners also rose, with Antofagasta and Anglo American both up 1.6%.



Elsewhere, the Stoxx's retail sector slid 0.5%, after the U.K. competition regulator said it may block the planned $9.5 billion merger between J Sainsbury and Asda. Sainsbury shares plunged 14%, while investors were also keeping an eye on shares in Asda-parent Walmart after the U.S. retailer released better-than-expected results Tuesday.



Advances in Europe followed similar moves in Asia, where Hong Kong's Hang Seng Index and Taiwan's Taiex, both heavily exposed to the trade conflicts of the past year, were up 1% and 1.2%, respectively, as tensions between Washington and Beijing continued to ease.



President Trump commented Tuesday that the U.S. may not increase tariffs on Chinese goods as scheduled on March 1, saying the negotiating deadline is "not a magical date."



With cabinet-level officials set to join the talks on Thursday, reports that the U.S. wants Chinese assurances of a stable yuan to be part of any agreement sent the Chinese currency 0.5% higher against the U.S. dollar to its highest since the end of January.



The yuan has still fallen 5.7% versus the dollar in the past 12 months, sparking concerns that Beijing has allowing its currency to devalue to neutralize the impact of U.S. trade tariffs.



"A pledge of renminbi stability has been discussed in multiple rounds of talks in recent months, and both sides have tentatively agreed it will be part of the framework of any final deal," said Lee Hardman, currency analyst at MUFG in a note.



European autos stocks also rallied amid softened U.S. rhetoric on trade. The sector was up 1.6%, having faced pressure in recent sessions on fears that the sector could be the next target of Trump administration tariffs.



In the U.S., futures put the S&P 500, the Dow Jones Industrial Average and the Nasdaq-100 on course to rise 0.1%. A positive session for the S&P 500 would constitute the index's seventh positive day out of the last eight.



While the market was watching for results from CVS Health Corp. and Gannett Co., due before the market open, minutes from the most recent Federal Reserve meeting were also due out later in the day.



The U.S. dollar and the yield on 10-year U.S. Treasurys were broadly flat, and although few market participants were expecting any groundbreaking news on interest-rate policy, the central bank's release will likely be parsed for clues on its plans for its balance sheet.



The minutes "should shed some light on the Fed's motivation for its shift in rhetoric at the January meeting and tell us how dovish it is. Investors are waiting to see whether we'll see an end to balance sheet normalization," said Ann-Katrin Petersen, investment strategist at Allianz Global Investors.



In commodities, gold remained close to its 10-month high, ticking up 0.1% to $1,346.20 a troy ounce, while copper broke fresh seven-month highs, edging up 0.1% to $6,339.50 a metric ton.



Write to David Hodari at David.Hodari@wsj.com





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