Markets Look for Signs of a G-20 U.S.-China Trade Deal
Markets welcome US-China trade agreement
Global stocks stayed at a record high Thursday after the US and China signed the first phase of an agreement to end an 18-month trade war.
The world's broadest stock index, MSCI, rose 0.1%. London, Frankfurt, Paris helped strengthen Europe after China's largest shares plummeted.
The agreement, signed by US President Donald Trump and Chinese Deputy Prime Minister Liu He, will only lift some of the trade duties that both sides impose on each other. All others will remain in force, which looks like another difficult stage of negotiations.
«We believe the agreement has a positive impact on risky assets, especially in emerging market equities, ”said Mark Hafele, chief investment officer at UBS Global Wealth Management. “But it's also important for investors to understand the limitations of the deal. Thus, we see that the trade represents a partial calm and not the end of trade tensions.».
Investors also assessed the policies of the central banks of developing countries in Turkey, South Africa and Egypt. Turkey was expected to continue cutting interest rates.
The European Central Bank was to publish the results of its December meeting shortly before its President Christine Lagarde's speech.
Andy Haldane, one of the last opponents of the Bank of England on the issue of rate cuts, was also supposed to speak. Weak data on inflation in the UK proved to be dangerous for the pound on Wednesday, so his opinion will be carefully listened to. The pound was still weak at $ 1.30 and 85.4 pence per euro.
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Japan's Nikkei rose 0.07% and the Shanghai Composite Index fell 0.5% in its third day of losses. Exchanges in Hong Kong, Australia, India and Vietnam are up.
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«While the deal brought relief, there were no positive surprises for the markets. For stocks to rally further, we need more evidence of improved real economy and earnings», – said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
US stocks are now trading 18x higher than expected earnings, near their peak since the 2008 financial crisis in 2018.