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FTSE revives in global rally as US-China trade talks resume

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FTSE revives in global rally as US-China trade talks resume

UK and global stock markets have rallied on reports that the US and China are making progress with Beijing considering a reversal of its tariff hike on American cars.

On Wall Street the S&P 500 advanced 0.8% to 2,659 as US automotive manufacturers’ shares rose after Bloomberg reported that China was preparing to cut tariffs on American-made cars to 15% from 40%.

A proposal to repeal the rise in tariffs made in July, which forced many car companies to raise their prices, had been made to China’s Cabinet, the news agency said.

US president Trump said in a post on Twitter: ‘Very productive conversations going on with China! Watch for some important announcements!’

This apparently referred to a telephone call reported today by Reuters between China’s vice premier Liu He, US Treasury secretary Steven Mnuchin and trade representative Robert Lighthizer.

‘Both sides exchanged views on putting into effect the consensus reached by the two countries' leaders at their meeting, and pushing forward the timetable and roadmap for the next stage of economic and trade consultations work,’ the ministry said in a statement to Reuters.

It follows the G20 summit in Argentina on 1 December when Trump and China’s president Xi Jinping agreed to a truce to delay a planned New Year increase in US tariffs to 25% from 10% on $200 billion of Chinese goods.

In Europe, Germany’s DAX 30 jumped 1.8% to 10,817 on gains by its major car companies BMW (BMWG.DE), Volkswagen (VOWG_p.DE) and Daimler (BMWG.DE) on hopes that talks between the two superpowers can recover from the arrest last week of a top Huawei executive in Canada.

Wirecard (WDI.DE), the Germany payment processor that is a top holding in Alex Darwall Jupiter European Opportunities (JEO), investment trust, gained 3.2% to €136.75, after prosecutors in Munich issued a penalty order against British short seller Fraser Perring for suspected manipulation of its share price.

France’s CAC 40 gained 0.7% after president Macron's promise last night to raise wages and cut taxes in a bid to prevent more protests in the euro zone's second largest economy.

In London the FTSE 100 gained 1.6%, or 107 points, to 6,829, more than making up for yesterday’s retreat when prime minister Theresa May called off a House of Commons vote on her Brexit deal due today.

Anglo American (AAA) led the FTSE higher, up 5.5% or 87p to £16.62, with fellow miners Rio Tinto (RIO), Glencore (GLEN) and Antofagasta (ANTO) up between 3.5% and 4.6%.

Engineers and industrial stocks were also prominent risers with Ashtead (AHT), John Wood Group (WG) and Melrose Industries (MRO) notching up gains of around 5%.

Scottish Mortgage (SMT), the FTSE’s only investment trust, recouped 4.3% with the listed global fund’s shares up 20p at 491.6p.

In the FTSE 250 ‘mid cap’ index, JPMorgan Indian (JIII) regained over 3% to 654p after yesterday’s falls caused by the sudden resignation of India’s central bank governor Urjit Patel.

Sticking with investment trusts, JPMorgan Chinese (JMC) added 3.4% to 245p on the back of US-China talks.

But there was little relief for the pound. Despite good wages data showing average weekly earnings rising 3.3% in October, a new 10-year high, sterling slid to around $1.25 on speculation that May would face a vote of no confidence with 48 Conservative MPs said to written letters expressing their loss of faith in her as party leader.

This came as May prepared to meet European Commission president Jean-Claude Juncker in Brussels in an last-ditch attempt to convince the EU to sweeten their deal so she could get it through Parliament. ‘There is no room for negotiations, but further clarifications are possible,’ he said on Twitter.

 

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