Asian Markets Surge As Trade Truce Lifts Equities
Asian markets were up across the board as news of a truce between Chinese President Xi Jinping and US President Donald Trump swept through the market. The agreement reached during the G-20 Summit in an unrelated meeting puts a halt on tariff escalation and gives teams on both sides 90 days to work on a concrete trade agreement. Areas of contention include technology, agriculture, and intellectual property.
The Japanese Nikkei lagged the market with a gain of 1.00%. The China-centric Shang Hai Composite and Heng Seng Index both posted gains greater than 2.5%. Others in the region closed with gains near 1.75% as easing trade tensions (and a dovish FOMC) point to renewed global growth.
Miners Lead The EU Market At Midday
Mining and auto stocks were up more than 4% at midday in the EU. The news of easing tariffs threats bode well for both sectors who’ve been threatened by increasing cost and declining demand related to the US/China trade dispute. EU based miners have a heavy exposure to China which helped drive shares of Antofagasta, Glencore, and Anglo American up more than 6%.
The German DAX led the major indices of the region with an advance of 2.5% in early trading. The gains in Germany were moderated to about 2.25% by midday but were still leading by a significant margin. The UK FTSE was a distant second with a gain of 1.61% while the French CAC trailed the powerhouse-markets with an advance of only 0.90%. Brexit negotiations and the Italian budget stand-off are still unresolved.
US Futures Point To Big Gains, Dow Surges 450 Points
The US futures market indicated a strongly positive open for the major indices on Monday morning. The NASDAQ led with a gain near 2.25% but the blue-chip Dow Jones Industrials and broad-market S&P 500 were both close behind with gains near 1.80%. The surge is due in part to the Trump-Xi agreement which is being viewed as a best-case scenario event, the surge is also due in part to the Fed’s dovish turn of sentiment. The combination is a powerful catalyst that should open the doors to future, global, GDP growth.
Secretary of the Treasury Steve Mnuchin expressed hope on Monday morning teams on both sides would be able to turn the tempory truce in a lasting agreement. Despite the ray of hope provided by the agreement, some pundits are already pointing to glaring differences of opinion that could easily derail any future improvements in relations. This week traders will be on the lookout for signs the two sides are following up on the truce announcement.
In energy news, the price of Brent and WTI both spiked about 5% in early Monday trading and helped lift stocks. The move is driven by expectations OPEC will vote to cut production at their meeting in Vienna scheduled for this week.