Imminent US-China deal boosts markets
13 January

Imminent US-China deal boosts markets


European markets awaited the signing of a Sino-U.S. trade deal later in the week, while technology stocks rose on a clutch of brokerage upgrades and price-target bumps. Euro Stoxx 50 index hit another record last week after the easing of U.S.-Iran tensions. The index broke above 3800 last week with shares in Germany rising about 0.2% as investors were cautious ahead of a "phase-one" trade deal expected to be signed in Washington later this week. London’s main index also gained on Monday in step with other global peers, as investors took heart from the imminent U.S.-China trade deal. The FTSE 100 added 0.3%, with trade hopes complemented by de-escalating Middle East tensions. Euro Stoxx 50 has retracted from previous gains to 3792.6, DAX is slightly up at 13495.25, FTSE is trading at 7620.30 while FRA40 is leading the gains currently quoting above 6052.


Asian shares shook off a quiet start to reach new 19-month highs ahead of the China-U.S. trade deal, although markets have yet to see the details of the agreement. S&P 500 was looking more bullish, rising 0.31% to 3,275.5, just short of record highs. MSCI’s Asia-Pacific shares quoted 0.61% higher, touching its highest point since June 2018. South Korea's trade-sensitive Kospi added 1.01% and Hong Kong's Hang Seng was up 0.95%. Taiwan shares added 0.74% in the first trading day following the re-election of President Tsai Ing-wen on Saturday. The benchmark Shanghai Composite was up 0.19% in the afternoon, turning around from losses earlier in the session. Nikkei was closed for a holiday. It fell sharply early last week when Iran attacked bases hosting U.S. military in Iraq, only to rally almost a thousand points when the two countries stepped back from hostilities.


Oil prices held steady as fears of conflict between the United States and Iran eased, with investors shifting their focus to this week’s scheduled signing of an initial U.S.-China trade deal, which could boost economic growth and demand. Brent was lower this morning at $64.79 having touched $71.75 per barrel last week before ending on Friday below $65. West Texas Intermediate crude was up 10 cents at $59.14 a barrel from the previous session. Oil prices surged to their highest in almost four months after a U.S. drone strike killed an Iranian commander and Iran retaliated with missiles launched against U.S. bases in Iraq but they slumped again as Washington and Tehran retreated from the brink of direct conflict. A U.S.-China trade deal is due to be signed in Washington on Wednesday.


The euro climbed to $1.1122, up from a $1.1083 low on Friday. Support comes in around $1.1060, while the recent peak at $1.1239 marks stiff resistance. The yen reached 109.83 having broken through tough resistance around 109.70 where rallies had repeatedly failed in the past couple of months. Against a basket of currencies, the dollar was barely higher at 97.373 well within the recent trading range of 96.355 to 97.817. The pound dipped 0.24% to $1.2981 after Bank of England policymaker Gertjan Vlieghe said he will vote for a cut in interest rates later this month, barring an "imminent and significant" improvement in the growth data. Gold slipped to $1,547.80 per ounce having hit a seven-year top last week of $1,610.90 at the height of Iran-U.S. tensions.


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