London (AFP) – Stock markets rose Wednesday as investors welcomed a China-US agreement to lower trade tensions that stoked hopes the economic superpowers will eventually reach a broader tariff deal. After two days of closely watched talks in London, the two sides said they had set up a framework to move towards a pact, following negotiations in Geneva last month that saw them slash tit-for-tat levies. The news provided some relief to markets after US President Donald Trump accused Beijing of violating that deal.
“Constructive talks between the US and China have put markets on a firmer footing, as investors hope that the worst of the tariff turbulence may have passed,” said Richard Hunter, head of markets at Interactive Investor. Paris and Frankfurt enjoyed modest gains in midday deals. London edged higher also as investors awaited finer details of the UK government’s latest spending and investment decisions due Wednesday. Asian stock markets won a lift on the China-US progress, with Hong Kong among the best performers. Analysts said investors would be keen to get a closer look at the agreement’s details.
“There’s perhaps a little disappointment… that we haven’t yet got a bigger announcement, even though there’s time to hear the full conclusions of the meeting,” said Deutsche Bank economist Jim Reid. As well as tariffs, a key issue in the discussions was China’s export of rare earths used in smartphones and electric vehicles, while Beijing was keen to see an easing of restrictions on its access to tech goods. China said the trade talks made new progress, and Vice Premier He Lifeng stressed the need for Beijing and Washington to strengthen cooperation. US Commerce Secretary Howard Lutnick said he was upbeat that concerns over rare earths “will be resolved” eventually, as the agreement is implemented. Chinese President Xi Jinping and Trump must approve the framework first.
The talks came as the World Bank downgraded its 2025 forecast for global economic growth to 2.3 percent — from the 2.7 percent predicted in January — citing trade tensions and policy uncertainty. It also said the US economy would expand by 1.4 percent this year, half of its 2024 growth. In a speech in Beijing, European Central Bank chief Christine Lagarde called for a de-escalation in the tariffs standoffs, warning that “coercive trade policies” risked harming supply chains and the global economy. “Once the US reaches an agreement with China, we expect the EU to be next in line,” said Kathleen Brooks, research director at trading group XTB, referring to US-EU negotiations to avert steeper tariffs next month.
Investors also awaited US inflation data due Wednesday, which analysts expect to reinforce the Federal Reserve’s slower pace of interest rate cuts. The dollar was mixed against main rivals ahead of the release, while oil prices firmed. In company news Wednesday, shares in Zara owner Inditex fell more than three percent in Madrid, after the world’s biggest fashion retailer posted disappointing first quarter sales.
– Key figures at around 1040 GMT –
London – FTSE 100: UP 0.1 percent at 8,859.25 points
Paris – CAC 40: UP 0.3 percent at 7,823.94
Frankfurt – DAX: UP 0.2 percent at 24,046.23
Tokyo – Nikkei 225: UP 0.6 percent at 38,421.19 (close)
Hong Kong – Hang Seng Index: UP 0.8 percent at 24,366.94 (close)
Shanghai – Composite: UP 0.5 percent at 3,402.32 (close)
New York – Dow: UP 0.3 percent at 42,866.87 (close)
Euro/dollar: UP at $1.1438 from $1.1426 on Tuesday
Pound/dollar: DOWN at $1.3495 from $1.3501
Dollar/yen: UP at 145.13 yen from 144.88 yen
Euro/pound: UP at 84.76 pence from 84.61 pence
Brent North Sea Crude: UP 1.2 percent at $67.68 per barrel
West Texas Intermediate: UP 1.5 percent at $65.94 per barrel
© 2024 AFP
