Markets Enjoy Rally as China-U.S. Trade Hopes Rise


Global markets rallied Wednesday on renewed optimism over talks on the China-U.S. trade war, while oil prices were energized by fading supply and demand concerns.

Europe's major stock markets rose strongly, with Frankfurt, Paris and London each adding about one percent. That followed strong gains across Asia and overnight on Wall Street.

Brent crude oil briefly spiked back above $60 per barrel, hitting a three-and-a-half week high, with OPEC cutting output and concerns easing over weak demand growth.

Upbeat sentiment has this week sent investors back into equities, which are traditionally regarded as a riskier bet.

"There's been further gains seen in risk assets... with stocks building on their recent gains while Brent crude has notched a three-week high back above the $60 a barrel level," said analyst David Cheetham at brokerage XTB.

"A third day of U.S.-China talks has provided greater hope of a de-escalation in the trade tensions between the world's two largest economies -- with people close to (U.S. President) Donald Trump suggesting he is getting more keen to strike a deal in order to boost the stock market."

After taking a battering in December and suffering a shaky start to 2019, confidence is slowly returning to equity trading floors.

Federal Reserve boss Jerome Powell provided the platform for a rally last week when he said the U.S. central bank had no "pre-set" plan for lifting interest rates and was "listening" to markets, signaling that the pace of hikes could slow this year.

Fear of higher borrowing rates was a major cause of last year's stocks losses.

The mood among dealers held this week as officials from China and the U.S. hunkered down for trade negotiations in Beijing that were extended into a third day. Trump on Tuesday described them as going "very well."

Bloomberg also reported White House sources as saying Trump is keen to get a deal done in order to boost stock markets, which he regards as a gauge of his success.

The Wall Street Journal said the two sides were moving in the right direction, with China ready to buy more U.S. goods and services, while further talks at cabinet level were being lined up next week.

- Oil rebounds from lows -

The global gains also come after a strong reading on U.S. jobs creation Friday, which soothed worries that the American economy was slowing down, and ahead of the corporate earnings season.

Oil prices -- which have tumbled in recent months partly because of worries about the impact on demand of the China-U.S. trade war -- were also on the up.

After topping out at $60.05 on Wednesday, Brent cooled slightly.

But Brent was still up 20 percent compared with just two weeks ago, prior to an oil production cut by the Organization of the Petroleum Exporting Countries and non-cartel producers from January 1.

Brent and the world's other key contract, WTI, had slumped late last year, hitting 18-month lows at $49.93 and $42.36 respectively.

To shore up sagging prices, OPEC and non-OPEC members, notably Russia, agreed in December to trim production by 1.2 million barrels a day from the start of this year.

- Key figures around 1115 GMT -

London - FTSE 100: UP 1.0 percent at 6,928.44 points

Frankfurt - DAX 30: UP 1.0 percent at 10,906.42

Paris - CAC 40: UP 1.1 percent at 4,827.45

EURO STOXX 50: UP 0.8 percent at 3,078.66

Tokyo - Nikkei 225: UP 1.1 percent at 20,427.06 (close)

Hong Kong - Hang Seng: UP 2.3 percent at 26,462.32 (close)

Shanghai - Composite: UP 0.7 percent at 2,544.34 (close)

New York - Dow: UP 1.1 percent at 23,787.45 (close Tuesday)

Oil - Brent Crude: UP $1.10 at $59.82 per barrel

Oil - West Texas Intermediate: UP $1.07 at $50.85

Dollar/yen: UP at 108.89 yen from 108.75 at 2200 GMT

Euro/dollar: UP at $1.1451 from $1.1441

Pound/dollar: UP at $1.2729 from $1.2717