Published: Fri, December 07, 2018
Economy | By

Global stocks give up chunk of US-China trade truce gains

Global stocks give up chunk of US-China trade truce gains

-China trade war boosted global stocks to their highest in roughly three weeks on Monday, while triggering a dollar sell-off and pushing the Chinese yuan and several trade-dependent currencies higher.

The rally in equities follows an agreement reached between Washington and Beijing at the G20 summit in Argentina on Saturday that calls for a 90-day trade tariff truce. Chipmaker AMD jumped 9.3 percent. Arone noted some "very sticky" issues remain unresolved between the world's two top economies. The S&P ASX/200 in Australia gave up 1 percent to 5,713.10. The FTSE 100 index of leading British shares was also 0.8 percent lower at 7,005.

Trump agreed to hold off on plans to raise tariffs after China agreed to swiftly purchase a very significant amount of American goods, including agricultural, energy, industrial, and other products, to reduce the USA trade deficit to China. US light crude was up $1 at $53.95 after earlier gaining more than 3 percent to an intraday high of $54.55.

US President Donald Trump and China's Xi Jinping sparked a worldwide rally Monday after calling a halt to their painful tariffs war for 90 days.

ASIA'S DAY: Japan's Nikkei 225 index gave up 2.4 percent to 22,036.05 and the Kospi in South Korea lost 0.8 percent to 2,114.35.

U.S. Treasury Secretary Steve Mnuchin said on Monday there was a clear shift in tone at Buenos Aires from past discussions with Chinese officials, as Xi offered a clear commitment to open China's markets to U.S. companies.

"Until the British parliament votes on the deal next week, we are going to see a steady drumbeat of Brexit headlines, which is going to keep the pound weak", Danske Bank strategist Morten Helt said, referring to a December 11 lawmakers' vote on Prime Minister Theresa May's agreement on leaving the European Union.

The offshore yuan gained more than one percent to 6.8790, although analysts said that with China's economy on less steady ground than a year ago relief for the currency may be brief.

The dollar index.DXY, which measures the greenback against a basket of six major currencies, was 0.2 percent lower.


"The parliamentary debate should reiterate the divisions between and within the political parties, pointing to a low likelihood of the Brexit deal being voted through in Parliament next week", said Petr Krpata, an currency strategist at ING.

Sterling climbed as well after the European Court of Justice's advocate general said Britain had the right to unilaterally withdraw its notice that it is leaving the European Union.

U.S. Treasury yields rose after the trade deal, but they reversed course as risk appetite faded and investors bought safe-haven U.S. debt.

Treasuries rallied hard late on Friday to leave 10-year yields down at 2.99 percent before bouncing back to 3.035 percent early on Monday.

Oil suffered its weakest month in more than 10 years in November, losing more than 20 percent as global supply outstripped demand.

It saw the pound rise as high of $1.28 versus the broadly weaker dollar.

Yields on riskier southern European bonds were down across the board, though Italian bonds trimmed some gains after the European Central Bank revealed Italy's share of ECB capital would be cut slightly.

Speculation is high the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation would agree some form of production cut at a meeting in Vienna on Thursday.

USA crude oil futures settled at $52.95 per barrel, up 3.97 percent. Brent crude rose 43 cents to $62.12 per barrel.

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