- Global stock markets bounced Tuesday after US President Donald Trump moved to reassure investors that the first phase of a trade deal between the US and China is still on the table.
- He tweeted: “The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!”
- Markets had slipped after comments from trade adviser Peter Navarro that the deal was “over.”
- He later released a statement saying his comments had been taken “wildly out of content.”
- European markets rallied Tuesday morning, while futures in the US pointed to a positive open.
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Global stocks climbed on Tuesday, paring early losses on comments made by Trump’s chief advisor Peter Navarro that the trade deal between US-China is “over.”
The comments were made in a Monday late night interview with Fox News.
Markets had pushed lower on this initial news. Futures underlying the S&P 500 slid 2% by around 3:00 a.m. ET.
Stocks bounced back, however, when Trump intervened, and rubbished Navarro’s claims. By late morning in Europe, futures in the US pointed to a positive open later in the day.
“The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!” –he tweeted.
Later Navarro said his comments had been taken “wildly out of context.”
Neil Wilson, chief market analyst at Markets.com, said: “Overnight, equity markets were whipsawed by the comments from Mr Navarro, but Asian stocks eventually rallied. US stocks edged higher on Monday but stayed well within the recent ranges; futures were all over the place overnight.”
“The market wouldn’t like fresh open conflict on trade between the two world’s largest economies, as it would make recovery from the pandemic even slower.
He added: “Navarro may speak the truth, but it’s an inconvenient truth that the White House would prefer to avoid right now. Markets are happy to nod along as long as the Fed has their back.”
Naeem Aslam, chief market analyst at Avatrade said: “The Dow Jones futures are trading slightly higher as traders do want to look past the Navarro-prompted risk aversion event that jolted the US futures and Asian markets.
Here’s the market roundup as of 11.10 a.m. in London (6.10 a.m. ET):
- European equities rose with Germany’s DAX up 1.9% Britain’s FTSE 100 up 0.8% and the Euro Stoxx 50 up 1.5%. European stocks were also boosted by solid PMI data out of the continent Tuesday morning.
- Asian indexes rose. Hong Kong’s Hang Seng rose 1.6%, China’sShanghai Composite rose 0.2%, and Japan’s Nikkei rose 0.5%.
- US stocks are set to open higher. Futures underlying the Dow Jones Industrial Averageare up 0.6% the S&P 500 up 0.5%, and the Nasdaq up 0.5%.
- Oil prices rose a little after US prices broke above $US40 Monday. West Texas Intermediate rose 0.6% to $US40.98 a barrel and Brent rose 0.6% to $US43.36 a barrel.
- The benchmark10-year Treasury yield rose to 0.71%.
- Gold rose 0.31% to $US1772 per ounce.
“The S&P 500 futures along with Dow Jones futures may struggle to maintain their gains due to geopolitical tensions that continue to simmer in the background as Trump administration puts further restrictions on four Chinese state media outlets,” he added.
Aslam thinks the phase one trade deal between both nations could still be in jeopardy despite Trump’s reassurance.
“China has halted its poultry purchase from a Tyson plant but so far the reason behind that is mainly due to Coronavirus.
“But the fear is that the phase one trade deal between the US-China could be in jeopardy especially if Trump picks up on this matter.
“The global stock market is likely to remain fragile as there are too many moving parts that are making risk-takers uncomfortable,” he added.
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