Stock prices rose yesterday, with sentiment on both sides of the Atlantic helped by optimism that a trade deal between the US and China is taking shape, dealers said.
Concerns that pen had not yet been put to paper on the pact were soothed by US Treasury Secretary Steven Mnuchin, who said a technical review was taking place and it would be signed in early January.
“China reaffirmed its pledge to purchase more than $40 billion in US agriculture products, US Treasury Secretary Steven Mnuchin said he was confident of a signed US/China ‘phase one’ deal in January,” the Charles Schwab brokerage house said.
Wall Street extended Thursday’s record-breaking run at the opening bell, with all key European indices also well in positive territory.
About 15 minutes into trading, the Dow Jones Industrial Average stood at 28,469.69, up 0.3 per cent.
The broad-based S&P 500 gained 0.4 per cent to 3,216.50, while the tech-rich Nasdaq Composite Index advanced 0.2 per cent to 8,907.21. All three indices ended at records on Thursday.
The British pound and London equities continued firm after Britain’s freshly elected parliament approved Prime Minister Boris Johnson’s divorce deal with the EU in a first vote.
The outcome in the lower House of Commons will help Johnson on his way towards meeting his campaign promise to “get Brexit done” on January 31.
The result provides markets with “some degree of certainty and confidence”, said analyst Joshua Mahony at trading firm IG.
Traders meanwhile set aside news that the British economy strengthened by more than expected in the third quarter of 2019 – despite looming Brexit.
On the corporate front, Anglo-Dutch oil giant Royal Dutch Shell warned it would take an impairment charge of between $1.7 billion and $2.3 billion (1.5 billion euros and 2.1 billion euros) in the fourth quarter – and cut its capital expenditure guidance.
The gloomy news sent both Shell’s ‘A’ and ‘B’ shares sliding in London.
“This... appears to show that (Shell) management underestimated how much weaker oil prices would be in the latter part of this year, as well as underestimating future demand for oil,” said CMC Markets analyst Michael Hewson.
Asian equities traded mixed with investors awaiting fresh catalysts to drive business, though with the China-US trade deal agreed and Christmas approaching many are in wind-down mode.