Global stocks rise on optimism about US-China deal
TOKYO, Japan (AP) — Global shares rose Thursday on optimism about a US-China trade deal and the Chinese government’s efforts to boost its economy.
France’s CAC 40 rose 1.4 per cent to 6,058 on the new year’s first day of trading, while Germany’s DAX was 1 per cent higher at 13,382. Britain’s FTSE 100 added 1 per cent as well, to 7,617.
US shares were set to drift higher, with Dow and S&P 500 futures both up 0.6 per cent.
Australia’s S&P ASX 200 gained 0.1 per cent to 6,690.60, while South Korea’s Kospi lost 1.0 per cent to 2,175.17. Hong Kong’s Hang Seng jumped 1.1 per cent to 28,511.92, while the Shanghai Composite gained 1.2 per cent to 3,085.20. Tokyo was still closed for the New Year’s holiday.
Market sentiment has been on an upswing after US President Donald Trump said an initial trade deal with China would be signed this month. The “Phase 1” trade deal calls for the US to reduce tariffs and China to buy larger quantities of US farm products.
Adding to the optimism was China’s central bank announcement Wednesday it will cut the amount of money banks will be required to have on hand from January 6 in an effort to boost the slowing economy.
The People’s Bank of China said the reserve requirement ratio for financial institutions would be lowered by 50 basis points, a move that’s expected to release about 800 billion yuan (US$114.6 billion) into the economy for lending purposes.
That will boost the economy ahead of the Lunar New Year that falls on January 25. Companies and individuals typically need large amounts of cash on hand during China’s most important annual holiday to pay bonuses, clear debts and cover other expenses.
Weighing on the optimism was an announcement earlier in the week from North Korean leader Kim Jong Un that his country will soon reveal a new strategic weapon and that North Korea was no longer obligated to maintain a self-imposed suspension on the testing of nuclear weapons and intercontinental ballistic missiles.
But some market observers said Kim’s comments were not specific enough to dampen optimism.
“The clear lack of details on both the threat itself and the timing, over and above the evident desensitized state of the market in previous tests, underpins this lack of reaction,” Jingyi Pan, market strategist at IG in Singapore, said.
US trading was closed Wednesday for the New Year’s holiday and opens Thursday.
Wall Street closed the books on a blockbuster 2019 for stock investors, with the broader market delivering its best returns in six years.
The S&P 500 finished with a gain of 28.9 per cent for the year, or a total return of 31.5 per cent, including dividends. The Nasdaq composite rose 35.3 per cent. For both indexes it was the best annual performance since 2013.
ENERGY: Benchmark US crude oil fell 1 cent to $61.05 a barrel. It lost 62 cents to settle at $61.06 per barrel on Tuesday. Brent crude, the international standard, rose 6 cents to $66.06 per barrel.
CURRENCIES: The dollar rose to 108.68 yen from 108.53 yen. It edged down to $1.1193 from $1.1231.
