Stock markets rallied yesterday as hopes resurfaced that China and the United States could quickly strike a mini trade deal, pending a wider agreement later, dealers said.
“Markets appear to have found some sense of positivity in a week that has seen its fair share of pessimism over the growing feeling the trade talks may have ground to a standstill”, said Joshua Mahony, senior market analyst at IG trading group.
Optimism returned to trading floors after a report said China’s point man on the US tariffs talks had offered to host a meeting to help push through their crucial mini pact.
At the same time, investors were nervous that the deal could collapse at any minute after US lawmakers passed a bill supporting Hong Kong rights, causing anger in Beijing.
Chinese President Xi Jinping yesterday said that China wants to reach an initial trade deal with the United States but is “not afraid” to fight back when necessary and will enact economic reforms at its own pace.
The world’s two biggest economies have been locked in a bruising trade conflict for more than a year, hitting each other with volleys of tariffs on hundreds of billions of dollars worth of goods.
Yesterday, the Wall Street Journal said top negotiator Vice Premier Liu He had invited his US counterparts for further discussions to haul the deal over the line.
London was the standout equity performer in Europe, rising well over one per cent, while Frankfurt and Paris advanced more modestly as they had to absorb a sobering set of data showing the eurozone’s economy has almost stalled after successive months of manufacturing decline.
IHS Markit said its composite eurozone purchasing managers’ index (PMI) fell to 50.3 points in November, down from a revised 50.6 points last month.
Wall Street was stronger at the opening bell.
The pound slid – boosting the London stock market that is dominated by multinationals earning in dollars – as separate IHS Markit PMI figures revealed that UK manufacturing and services output contracted at the fastest rates in 40 months.
Christine Lagarde, meanwhile, on Friday urged European countries to “innovate and invest” more to support growth at a time of global uncertainty, in her first major policy speech as president of the European Central Bank.
The eurozone economy is expected to grow just 1.1 per cent this year, she said, “much lower than previously forecast” as “trade tensions and geopolitical uncertainties” take their toll.
Elsewhere yesterday, oil prices extended Thursday’s rally, with investors keeping close tabs on developments in the trade talks and global prospects, with signs of slowdown likely to boost the chances of an OPEC production cut deal being extended next month.