Global markets took cheer from the signing of a preliminary China-U.S. trade agreement that investors hope will bring better relations between the two biggest economies
Global markets took cheer Thursday from the signing of a preliminary China-U.S. trade agreement that investors hope will bring better relations between the two biggest economies.
Germany’s DAX advanced 0.4% to 13,490.16 while the CAC 40 in Paris also climbed 0.4% to 6,056.01. In Britain, the FTSE 100 was almost unchanged, at 7,639.86. Wall Street looked set for gains, with the future contract for the S&P 500 gaining 0.3% to 3,304.70. The future for the Dow also rose 0.3% to 29.114.00.
President Donald Trump and China’s chief negotiator, Liu He, signed the “Phase 1″ deal on Wednesday before a group of corporate executives and reporters at the White House. The pact eases some sanctions on China. In return, Beijing has agreed to step up its purchases of U.S. farm products and other goods.
The agreement helped propel the Dow Jones Industrial Average closed above 29,000 points for the first time and the S&P 500 index hit its second record high in three days Wednesday.
The deal done, traders will likely shift their attention elsewhere for now. China releases an update on its economic growth on Friday. But skepticism over the long-term prospects for resolving key issues remains, analysts said.
In Asia on Thursday, Japan’s Nikkei 225 added less than 0.1% to 23,933.13, while the Kospi in South Korea added 0.8% to 2,248.05. Shares fell in China, with the Shanghai Composite index giving up 0.5% to 3,074.08. In Hong Kong, the Hang Seng picked up 0.4% to 28,883.04.
In Australia, the S&P ASX/200 climbed 0.7% to 7,041.80 to a fresh new high, on optimism over the trade deal.
Although it’s limited in scope, investors have welcomed the U.S.-China deal in hopes that it will prevent a further escalation in the 18-month long trade conflict that has slowed global growth, hurt American manufacturers and weighed on the Chinese economy.
Now, Beijing and Washington have to deal with more contentious trade issues as negotiations move ahead. Punitive tariffs will remain on about $360 billion in Chinese goods as talks continue.
“Despite some negative spin-doctoring this morning, it’s hard to argue that the deal marks a significant step in ending the frictions that have cast a dark cloud over global economic growth,” Stephen Innes of AxiTrader said in a commentary.
With the “Phase 1” agreement now a done deal, investors have more reason to focus on the rollout of corporate earnings reports over the next few weeks. Earnings have been flat to down for the last three quarters, and if the fourth quarter meets expectations, it should be around the same.
However, analysts are projecting 2020 corporate earnings growth to jump around 9.5%, which is why traders will be listening this earnings reporting season for any clues management teams give about their business prospects in coming months.
In other trading, benchmark crude oil recouped overnight losses, gaining 49 cents to $58.30 per barrel in electronic trading on the New York Mercantile Exchange. It fell 42 cents to settle at $57.81 a barrel on Wednsday. Brent crude oil, the international standard, picked up 72 cents to $64.72 per barrel. It dropped 49 cents to close at $64 a barrel overnight.
Gold edged $1.50 higher to $1,555.50 per ounce.
The dollar rose to 109.97 Japanese yen from 109.93 yen on Tuesday. The euro strengthened to $1.1157 from $1.1151.
AP Business writers Damian J. Troise and Alex Veiga contributed.