US, China deal lifts stocks into record

US, China deal lifts stocks into record
US, China deal lifts stocks into record

We show you our most important and recent visitors news details US, China deal lifts stocks into record in the following article

Hind Al Soulia - Riyadh - NEW YORK/BEIJING — Wall Street stocks pushed into record territory on Monday as investors absorbed a new US-China trade deal and Beijing released some upbeat economic data.

All three main US stock indexes, the benchmark Dow Jones Industrial Average, the broader S&P 500 and tech-heavy Nasdaq all moved into record territory during morning trading.

The Dow was up 0.6 percent at 1630 GMT.

European stock markets pushed higher Monday, led by strong gains for London thanks to a steadier pound.

The dollar largely weakened and Asian equities mostly retreated as markets awaited details of a key China-US trade deal.

Sterling held up against the dollar, but was down from Friday's 18-month high against the greenback. The pound drifted lower against the euro, against which it had hit a more than three-year peak on Friday.

The pound surged Friday after Prime Minister Boris Johnson's crushing election win that allows him to push through his Brexit agreement.

The currency's surge stalled Monday by "UK services and manufacturing PMI surveys slumping sharply", said Joshua Mahony, senior market analyst at IG trading group.

"However, while the contraction in both sectors is far from ideal, this is likely to be a short-term drop as businesses held off until the election result became clear."

The pound's steadier showing Monday helped to boost London's benchmark FTSE 100 index that features a number of multinationals earning in dollars.

Around 1430 GMT, the FTSE 100 was up 2.5 percent. In the eurozone, Frankfurt's DAX 30 index climbed 0.8 percent and the Paris CAC 40 won 1.2 percent.

US and Chinese officials on Friday announced a partial trade deal, with Washington cancelling and reducing tariffs in exchange for Chinese pledges to increase purchases of US exports and reform its trade practices.

All three main US stock indexes, the benchmark Dow Jones Industrial Average, the broader S&P 500 and tech-heavy Nasdaq all moved into record territory during morning trading.

The Dow was up 0.6 percent at 1630 GMT.

Market watchers said investors may be largely discounting the chances the process could take a turn for the worse.

"A deal must still be signed, including an agreement over a translated text, but the market is evidently optimistic that the deal will get finalised in early January as planned," analysts at Briefing.com wrote.

"For good measure, data out of China showed better-than-expected industrial production and retail sales growth for November."

European stock markets also moved higher Monday, led by London's FTSE 100 which benefitted from continued post-election optimism and a dip in the value of the pound.

The pound surged Friday after Prime Minister Boris Johnson's crushing election win, striking an 18-month high against the dollar and a more than three-year peak against the euro.

The currency pulled back on Monday on "UK services and manufacturing PMI surveys slumping sharply", said Joshua Mahony, senior market analyst at IG trading group.

"However, while the contraction in both sectors is far from ideal, this is likely to be a short-term drop as businesses held off until the election result became clear."

The pound's dip on Monday helped to boost London's benchmark FTSE 100 index that features a number of multinationals earning in dollars, which closed the day with a 2.3 percent jump in value.

In the eurozone, Frankfurt's DAX 30 index climbed 0.9 percent to close just shy of a record high. And the Paris CAC 40 won 1.2 percent, briefly breaching the 6,000 points level for the first time in 12 years.

The eurozone's economy meanwhile remained at a near standstill in December, extending the worst quarterly performance since 2013, according to a closely-watched survey compiled by IHS Markit research group.

While the removal of uncertainty surrounding Brexit allowed markets to breathe a huge sigh of relief, analysts urged caution with the saga having some way to run.

"This is just the end of the beginning," noted Quentin Fitzsimmons at T. Rowe Price.

"The real work of negotiating the UK's future trading relationship with the EU lies ahead and that has the potential to become very complicated."

A truce in the US-China trade war offers Xi Jinping breathing space as he faces a slowing economy and political trouble in Hong Kong, but experts warn 2020 will be another tough year for the Chinese president.

The pared-down "phase one" deal announced Friday includes a reduction in US tariffs on China, in exchange for an increase in Chinese purchases of US goods and better protections for intellectual property.

But tussles over the most controversial Chinese trade practices - including steep state subsidies - have been left to future talks.

The trade war launched nearly two years ago by President Donald isn't over, analysts say, as there's always the risk of Beijing not upholding its end of the bargain and the mercurial US leader throwing more tariff bombs.

The mini-deal is a "delay tactic to buy the Chinese Communist Party breathing space and allow it to stay in the game against overwhelming odds," said Larry Ong, senior analyst with risk consultancy SinoInsider.

Growth of the Chinese economy slowed to six percent in the third quarter - its most sluggish rate in nearly three decades - as demand for exports cooled and Chinese consumers tightened their belts.

In November exports fell 1.1 percent from a year earlier, the fourth straight fall, and exports to the US nosedived 23 percent as the trade war disrupted supply chains and left investors on edge.

Trump has cancelled a new round of tariffs that had been due to kick in on Sunday and would have affected smartphones, toys and laptops among other goods, while Beijing also called off levies planned in retaliation.

In another major concession, Washington will also slash in half the 15-percent tariffs imposed on $120 billion in Chinese goods, like clothing, that were imposed on September 1.

However, this "unexpected" tariff rollback will only have a "marginal" impact on China's economy, said Lu Ting of Nomura bank.

"The worst is not yet over and 2020 looks set to be yet another tough year."

"People worry that both sides were under so much time pressure to conclude something before Sunday, that they may have once again prematurely announced an agreement," he told AFP.

US Trade Representative Robert Lighthizer said he expected the deal to be signed in early January, taking effect 30 days later.

US officials also said China has promised to import $200 billion worth of US goods - including farm produce, energy and services - over the next two years, but China declined to offer any details.

"Different interpretations of what has been agreed upon are potential obstacles to completing the deal," Lu from Nomura said.

Trump said existing tariffs of 25 percent on $250 billion of Chinese imports would stay in place pending further negotiations on a second-phase deal.

Although he tweeted Friday that talks will start "immediately", the Chinese side are treading more cautiously.

Starting talk on the next phase "will depend on the implementation of the phase one agreement", China's deputy finance minister Liao Min said.

"I expect things will grind to a halt," said Naughton. "China has no more it is willing to give. The US will slip into wait-and-see mode, monitoring Chinese compliance."

Ong from Sinoinsider said the CCP is notorious for not living up to its promises and warned factional struggles among the party will make it harder to meet China's "phase one" deal commitments.

"We can expect President Trump to become a 'Tariff Man' again once China is found to have lapsed."’ — AFP


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