Global Equities Surge Following An Announced Trump/Xi Trade Truce
The U.S. futures are pointing to a broadly higher open on Monday following an announced trade truce between President’s Trump and Xi. The truce means that no new tariffs will be levied in the near-term as negotiations begin again. President Trump says the talks are back on track but did not indicate when an actual trade deal could be expected. Along with the agreement to no raise tariffs the U.S. will ease restrictions on Huawei and China will begin buying more agricultural products. Senior economic adviser Larry Kudlow quashed some of the positive vibes though, saying Huawei would not receive a general amnesty.
Chip stocks led the gains with shares of top manufacturers advancing 5.0% to 7.0%. Skyworks Solutions led the charge with a gain of 7.2%, Qualcomm and Broadcom were among the laggards with gains near 5.0%. Shares of Apple, FedEx, and Caterpillar also advanced strongly on renewed optimism for global economic activity. The NASDAQ Composite was the strongest moving index with a gain near 1.9%, the broad-market S& 500 is runner up at 1.15% while the Dow Jones Industrials are up only 1.05. Later in the session traders will looking out for ISM data due at 10 AM.
Europe Broadly Higher Despite Manufacturing Contraction
European indices are broadly higher in early Monday trading despite weaker than expected manufacturing data. European factory activity fell more than expected indicating another month of contraction. The German manufacturing PMI shows the EU’s pillar economy contracted for a sixth month, Italy’s economy contracted for a ninth month, and UK activity fell to a near 9-year low.
The UK FTSE 100 led the charge despite the weakness in manufacturing rising 1.35% by midday. The German DAX was close behind with a gain near 1.25%, the French CAC advanced 0.85%. Chips led the rally, up 5% to 10%, and helped the entire tech-complex to advance more than 2.0% and set a one-year high.
In political news, EU lawmakers are scrambling to reach a deal that will allow treaty-talks with Switzerland to resume. If no deal can be reached Swiss stocks will no longer be available through EU exchanges.
Asia Mostly Higher Following Trump/Xi Meeting
Asian markets are mostly higher after the Monday session as trade-driven euphoria lifts investor sentiment. The mainland Chinese indices led the advance, the Shanghai Composite gaining 2.22%. The Nikkie rose 2.15% aided by a 3.0% gain in Fanuc. Australia rounds out the list of advancers with a gain near 0.45%. The Korean Kospi is the only index to post a loss and that only -0.04%. The Korean index was hindered by a -0.85% in shares of Samsung. The Hong Kong Hang Seng was closed for a holiday. Protests in that city-state continue to swell.