Stocks up as markets steel themselves for tariff decision

LONDON: Global stocks pushed higher on Thursday following signals from the White House that US President Donald Trump may tone down his tariff plans.

Meanwhile the euro got a boost, but only briefly, from the European Central Bank inching towards a stimulus exit.

As expected, the ECB held its key interest rates at record lows, but it signalled greater confidence in the eurozone economy and its own chances of hitting its elusive inflation goal by dropping talk of boosting its mass bond-buying programme.

The euro jumped up immediately after the ECB statement was released, from $1.237 before to $1.243. It later gave up those gains and sank lower.

Analysts said the ECB dropping a phrase from the statement that it could increase its bond-buying programme if necessary wasn’t that big a change as no one expected the central bank to increase purchases.

“Easing bias may be gone, but ECB balance sheet won’t be reducing in size anytime soon with reinvestments for extended period,” tweeted market analyst Michael Hewson at CMC Markets.

Meanwhile, he noted, the US Federal Reserve is raising rates and reducing its holding of bonds. “Doesn’t feel that hawkish.”

In equities trading, a softer tone on threatened tariffs from the White House late Wednesday helped Asian stock markets rise on Thursday, continuing a week of volatility sparked by fears of a global trade war.

Stocks in Europe and the United States also moved higher.

London’s benchmark FTSE 100 index closed 0.6 percent higher.

Eurozone stocks got a boost from the ECB, with Frankfurt’s DAX 30 adding 0.9 percent and the Paris CAC 40 climbing 1.3 percent.

“The lack of properly hawkish sentiment helped the eurozone indices more than it hurt the euro,” said analyst Connor Campbell at Spreadex.

“Of course all this movement isn’t just down to the ECB. The fact that Donald Trump has oh-so-slightly softened his stance on trade tariffs — though the market will get more info on that after the day’s meeting at the White House — sent the Dow Jones 0.3% higher after the bell rang on Wall Street,” he added.

Wall Street stocks were also higher in late morning trade, with the Dow up 0.2 percent.

Equities have swooned since Trump last week unveiled the levies as part of his “America First” agenda, which were met with anger across the world and from leaders in his own Republican Party.

European Union officials have outlined planned retaliatory measures on targeted American exports to be rolled out if the US makes good on its threat, while China has said it would make “an appropriate and necessary response”.

This week has seen sharp swings in stocks from positive to negative as predictions the measures will not be as bad as feared were offset by news Wednesday the president’s pro-trade top economics advisor Gary Cohn had resigned.

But for globalists, Thursday was positive after White House press secretary Sarah Sanders said there were “potential carve-outs for Mexico and Canada” and other countries based on national security. And Commerce Secretary Wilbur Ross insisted: “We’re not looking for a trade war.”

A final decision on the tariffs is expected soon, with Trump saying Thursday that the trade tariffs will be “very fair”.

“There is a feeling that President Trump may be toning down his protectionism push,” said Makoto Sengoku, market analyst at Tokai Tokyo Research Centre.

“Things may not turn out as bad as we feared before,” he told AFP.

– Key figures around 1630 GMT –

London – FTSE 100: UP 0.6 percent at 7,203.24 points (close)

Frankfurt – DAX 30: UP 0.9 percent at 12,355.57 (close)

Paris – CAC 40: UP 1.3 percent at 5,254.10 (close)

EURO STOXX 50: UP 1.1 percent at 3,415.74

New York – Dow: UP 0.2 percent at 24,844.35

Tokyo – Nikkei 225: UP 0.5 percent at 21,368.07 (close)

Hong Kong – Hang Seng: UP 1.5 percent at 30,654.52 (close)

Shanghai – Composite: UP 0.5 percent at 3,288.41 (close)

Euro/dollar: DOWN at $1.2328 from $1.2413 at 2130 GMT

Pound/dollar: DOWN at $1.3829 from $1.3901