© Reuters. FILE PHOTO: A Participant Cleans the Carpet Next to the US and Chinese National Flags in Beijing
By Marc Jones
LONDON (Reuters) – Risk appetite returned on world markets Thursday after the US and China tentatively moved into the world The media reported that they had agreed to a ceasefire in the run-up to a much-anticipated weekend meeting of the leaders of the two nations in Tokyo.
The South China Morning Post (SCMP), citing sources, argued that Washington and Beijing would work out an agreement that would help prevent the next round of customs clearance for another $ 300 billion in Chinese imports.
On Wednesday, US President Donald Trump said a trade deal with his Chinese counterpart Xi Jinping was possible this weekend, although he was ready to impose tariffs on virtually all remaining Chinese imports if talks fail.
"But the truce cake seems to have been baked," the SCMP quoted one of its sources.
Hopes that the world's two largest economies would finally reach an a Consensus was enough to cheer investors, and MSCI's broadest index of global stocks rose over 0.2% after four consecutive losses ().
Germany's trade-critical DAX () led early gains in Europe, rising by 0.7% against the other major and Wall Street futures, from 0.2% to 0.6%.
Asia had strongly closed with the Chinese leading index () closing down 1
"The market is focused on hoping for a ceasefire (between the US and China)," said ING's Petr Krpata for EMEA FX and Investment Strategist.
"We still think it will only be temporary and that the situation will deteriorate again in the summer before it improves."
The trade dispute has already shaken investors who dropped shares for bonds and gold for safety reasons this year. It also prompted the US Federal Reserve to reverse 180% interest rate hikes in December to next month 's cutbacks.
Many traders were still prudent and expected that the market would remain until after a narrow range of weekend G20 leaders meeting in Osaka, Japan, where Trump also holds bilateral talks with other nations.
"The focus remains on the G20 meeting with a story in the SCMP … and raises the market as a whole, though the details suggest nothing has yet been agreed," said JPMorgan (NYSE 🙂 in one opinion.
"Overall, it seems more likely that the tariffs will be raised after the meeting than not, although the timing of this may be confused with a desire for positive optics."
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Trump acted on the Negatively impacting US monetary policy Wednesday, accused Fed chairman Jerome Powell of "having done a poor job" and "proving how hard he is" by not lowering interest rates.
Markets are confident that the Fed will ease at its next meeting in July, but betting had to cut back by half a point after cautious comments by various policy makers.
The likelihood of a less aggressive Fed and the expectation of a ceasefire between China and China helped to reduce selling pressure on the US dollar, which rose 0.1% to 96,300 () against a basket of one Three-month low of 95,843.
The dollar rebounded slightly from the yen from its low of 106.77 to 108.13
The gains in the US dollar detracted somewhat from the glitter of gold, which broke a six-session profit margin to $ 1,403.94 an ounce.
Oil prices also took profit-taking after overnight, when they saw an unexpectedly sharp fall in crude oil inventories as exports reached a record high and inventories of refined products fell surprisingly.
Brent crude () futures fell 55 cents to $ 65.92, while US crude () lost 47 cents to $ 58.91 a barrel.