- Global markets are bouncing back after Trump revealed a more conciliatory than expected policy on Chinese companies.
- The Dow Jones is up almost 250 points in late morning trade.
- European markets are making gains of up to 1% on the day.
- Chinese stocks had dropped sharply overnight.
- You can follow global market developments at Markets Insider.
Stocks in both Europe and the Americas are bouncing on Wednesday after President Donald Trump made a move that looks likely to deescalate the trade war developing between his adminstration and the rest of the world.
The news buoyed investors, who have previously been nervous about the possibly devastating consequences a trade war could have on the global economy.
Major share indexes in both Europe and North America are significantly higher on Wednesday as a result of the announcement, with the USA’s benchmark Dow Jones Industrial Average up by almost 250 points as of around 11.15 a.m. ET (4.15 p.m. BST).
Here’s the scoreboard in the US:
- Dow Jones Industrial Average – up 249 points (1.03%) to 24,532.
- S&P 500 – up 13 points (0.5%) to 2,736.
- Nasdaq – up 15 points (0.2%) to 7,577.
It is much the same story in Europe, where after a bad start to the day, major indexes are largely up between 0.5% and 1%. Here’s the scoreboard:
- Germany’s DAX – up 1.00% to 12,356.
- France’s CAC 40 – up 0.97% to 5,332.
- Italy’s FTSE MIB – up 0.64% to 21,555.
- Spain’s IBEX 35 – up 0.22% to 9,658.
- Britain’s FTSE 100 – up 1.04% to 7,616.
While Trump’s climb down has soothed Western markets, things in Asia overnight were not pretty, with the earlier escalation of trade tensions having a significant negative impact on Chinese markets, with stocks in the world’s second largest economy suffering major losses.
China’s benchmark share index, the Shanghai Composite, dropped 1.1% on Wednesday – leaving it nursing losses of 22% from its most recent high, extending the bear market it entered at the beginning of the week. Bear markets are characterised by a fall of 20% or more from a high.
Negative sentiment in Asia overnight also saw Hong Kong’s Hang Seng drop 1.7%, and the Shenzhen Composite fall 1.8%.
For China, there is an ongoing double whammy of bad news. As well as Chinese stocks falling into a bear market, the country is also witnessing a major slide in the price of its currency, the yuan, which overnight fell to its lowest level in more than six months.
The USD/CNH, or the US dollar versus the offshore traded yuan, hit a high of 6.6105 earlier, leaving it at the highest level since December 20 last year.
An increase indicates the US dollar is strengthening against the yuan.
Along with escalating trade tensions between the United States and China, the yuan has been under pressure in recent months from a softening in Chinese economic data as well as divergent monetary policy settings between the PBOC and US Federal Reserve.