London (AFP) – Wall Street stocks bounced higher Thursday after US President Donald Trump and Chinese leader Xi Jinping spoke amid their trade war, while the euro got a boost from the European Central Bank signalling an end to its rate-cut cycle.
Wall Street’s major indices recovered from earlier losses after Trump posted that the call was positive. “The call lasted approximately one and a half hours, and resulted in a very positive conclusion for both Countries,” Trump said on Truth Social, adding that US and Chinese trade teams would hold a new meeting “shortly”. The call follows officials from the world’s two biggest economies accusing each other of jeopardising a trade war truce agreed last month in Geneva.
City Index and FOREX.com analyst Fawad Razaqzada said, “the markets were hoping that the direct line between Washington and Beijing could ease trade tensions, even if temporarily.” While he said that appears to have been the case, he added, “it is super important that the Trump-Xi call now leads to some concrete movement.” After his return to the White House, Trump launched a tariffs blitz, introducing a 10 percent minimum tariff and higher rates on many countries, with China subject to the highest rates. Some of the higher rates have been suspended as negotiations are under way.
European stock markets closed mixed even though the ECB cut its key deposit rate a quarter point to two percent, as expected. It was its eighth reduction since June last year when it began lowering borrowing costs. But ECB President Christine Lagarde stated the central bank is “getting to the end” of the rate-cutting cycle, as inflation has largely dropped to its two percent target in the 20-nation currency bloc. That sent the euro surging against the dollar, and European stocks gave up earlier gains.
The ECB’s series of cuts stands in contrast to the US Federal Reserve, which has kept rates on hold recently amid fears that Trump’s levies could stoke inflation in the world’s top economy. Investors are now looking to the release on Friday of US non-farm payrolls data, which the Fed uses to help shape monetary policy. Other data released this week has been mixed. April jobs openings data beat expectations, but according to payroll firm ADP, private-sector jobs rose by only 37,000 last month. This was a sharp slowdown from April’s 60,000 and less than a third of the amount forecast in a Bloomberg survey.
Another survey showed activity in the US services sector contracted in May for the first time since June last year. The readings stoked concerns that the world’s number one economy was stuttering, with the Fed’s closely watched “Beige Book” study noting that “economic activity has declined slightly.” The readings ramped up bets on a Fed cut, with markets pricing in two by the end of the year, starting in September. Still, there is some concern that Trump’s tariff blitz will ramp up inflation, which could put pressure on the US central bank to keep borrowing costs elevated.
– Key figures at around 1530 GMT –
New York – Dow: UP 0.3 percent at 42,559.64 points
New York – S&P 500: UP 0.4 percent at 5,996.55
New York – Nasdaq Composite: UP 0.7 percent at 19,602.62
Paris – CAC 40: DOWN 0.2 percent at 7,790.27 (close)
Frankfurt – DAX: UP 0.2 percent at 24,323.58 (close)
London – FTSE 100: UP 0.1 percent at 8,811.04 (close)
Tokyo – Nikkei 225: DOWN 0.5 percent at 37,554.49 (close)
Hong Kong – Hang Seng Index: UP 1.1 percent at 23,906.97 (close)
Shanghai – Composite: UP 0.2 percent at 3,384.10 (close)
Euro/dollar: UP at $1.1448 from $1.1417 on Wednesday
Pound/dollar: UP at $1.3593 from $1.3548
Dollar/yen: UP at 143.70 yen from 142.86 yen
Euro/pound: DOWN at 84.23 pence from 84.26 pence
Brent North Sea Crude: UP 1.1 percent at $65.57 per barrel
West Texas Intermediate: UP 1.2 percent at $63.57 per barrel
© 2024 AFP
