Global stock markets rose yesterday on optimism over US-China trade talks and signs of a provisional deal to avoid another US government shutdown.
Wall Street followed European gains in morning trading, jumping more than a per cent after news that senior US lawmakers had reached the tentative agreement.
However, Donald Trump has yet to comment on the deal, which provides nearly $1.4 billion in money for construction of a wall on the border with Mexico − far short of the $5.7 billion the US President had sought for the controversial project.
“Markets are questioning what level of support a tentative deal to avoid another government shutdown will receive from US lawmakers and President Donald Trump,” said analysts at Charles Schwab.
And there remains “uneasiness regarding the ongoing US/China trade negotiations and some key inflation data looming on the week’s horizon,” they said.
IG analyst Joshua Mahony agreed, saying that “a significant amount of global sentiment rests on Donald Trump's shoulders, with the ability to break the deadlock in talks with China and avert another government shutdown key for market direction”.
Negotiations are under way in Beijing aimed at averting a planned increase in US tariffs that could slow the global economy.
Top-level officials are set to arrive in the Chinese capital for meetings tomorrow and on Friday, ahead of a March 1 deal deadline.
Investors responded positively to reports that Trump wants to meet Xi Jinping “very soon”, just days after the US President had appeared to write off an imminent summit with his counterpart.
US markets pushed upwards in morning trading, with the DJIA index jumping 1.25 per cent.
Oil prices, meanwhile, rose nearly two per cent after Opec said it sharply reduced production last month, with the world’s top exporter Saudi Arabia slashing output.
Eurozone shares closed up to one per cent higher, but London lagged behind its peers as the Brexit-weary British pound clawed back some losses after dropping sharply on Monday on dismal monthly GDP and manufacturing data.
“US-China trade talks continue and that has boosted European stock markets,” said analyst David Madden at CMC Markets.
Washington is demanding changes from Beijing on what it says are unfair commercial practices. Failure by the economic superpowers to reach an agreement would see US tariffs on $200 billion worth of Chinese imports more than double.
The US lawmakers assuaged fears of a chaotic repeat of the recent 35-day partial US government shutdown − the longest in the country's history.