- Global stocks climbed on Tuesday after the US and China held “constructive” talks about their Phase One trade deal.
- Japan’s Nikkei rose 1.4%, while in Europe, the broad Euro Stoxx 50 climbed 0.7% in morning trade.
- “Both sides had a constructive dialogue regarding stepping up macroeconomic policies coordination and the implementation of the phase one trade deal,” the Chinese government said in a statement.
- Markets were also bullish on hopes of a coronavirus vaccine, after Trump said he would be prepared to implement emergency legislation to get a vaccine on shelves in the US this year.
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Global stocks climbed on Tuesday after the US and China held “constructive” talks about their Phase One trade deal, and investors continued to look optimistically on positive developments around the creation and implementation of a coronavirus vaccine.
US and Chinese envoys held positive “Phase One Trade” talks over the phone on Tuesday morning and discussed co-coordinating their countries economic policies.
“Both sides had a constructive dialogue regarding stepping up macroeconomic policies coordination and the implementation of the phase one trade deal,” the Chinese government said in a statement.
US President Donald Trump said last week that he personally cancelled US trade talks with China. Both countries were due to review their Phase One trade deal earlier this month but this was postponed indefinitely.
US and China have been at loggerheads in recent months over a number of issues, including Beijing’s approach to Hong Kong, and accountability over the COVID-19 outbreak.
Here’s the market roundup as of 9.45 a.m. in London (4:45 am ET):
- Asian indexes were mixed with China’s Shanghai Composite down 0.4%, Hong Kong’s Hang Seng was flat, and Japan’s Nikkei up 1.4%.
- European equities rose, with Germany’s DAX up 0.6%, Britain’s FTSE 100 up 0.3%, and the Euro Stoxx 50 up 0.7%.
- Futures underlying the Dow Jones Industrial Average, the S&P 500, and the US Tech 100 rose 0.4, 0.5 and 0.2%.
- Oil prices were mixed, with West Texas Intermediate flat at $US42.59, and Brent crude up 0.2% at $US45.74
- The benchmark 10-year Treasury yield rose to 0.68%.
- Gold fell 0.2% to $US1,935 per ounce.
“The recent escalation of geopolitical tensions between the U.S. and China fuelled concerns that the U.S. and China’s trade agreement can collapse,” Naeem Aslam, chief market analyst at Avatrade said.
“However, both sides are satisfied with their progress on the trade agreement and the progress which has been made so far.”
Craig Erlam, senior market analyst at OANDA said the constructive talks are the “one bright spot” in the very strained relationship between the countries.
The S&P 500 recorded a new high on Monday of 3431.28 on Monday, boosted by positive sentiment over a vaccine sentiment. Late on Sunday the FDA issued an “emergency use authorization” for the use of blood plasma to treat COVID-19.
In a separate development, the Financial Times reported Sunday that the White House is exploring an emergency use authorization for AstraZeneca’s coronavirus vaccine.
If realised, this would bypass usual regulatory standards and potentially bring a vaccine to the US market before November’s presidential election.
German GDP figures on Monday showed the country’s economy shrank 9.7% during the second quarter. This was slightly less grim than the initial forecasts of a 10.1% drop.
Aslam said: “The fact that the contraction in the GDP wasn’t as bad as the forecast encouraged traders to back riskier assets.”
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