London: World markets were mostly firmer Monday as fears about a China-US trade war were tempered by hopes the two sides will be able to come to an understanding, dealers said.
Asian and European equities rebounded somewhat, despite heavy pre-weekend losses on Wall Street, as trade war fears gave way to moderate investor optimism — but doubts remained.
“European markets are in a more optimistic mood today, with the focus shifting towards a more constructive end to the US-China stand-off,” said analyst Joshua Mahony at trading group IG.
“However, recent weeks have shown us that volatility is likely to remain a key part of the trading landscape, with daily shifts in tone from US and China driving huge swings in stocks of late.”
US stocks pared Friday’s losses at the opening bell on Monday, rising 0.7 percent.
They plunged around two percent Friday after Donald Trump warned of tariffs on an additional $100 billion worth of Chinese imports, to which Beijing responded by saying it would stand firm.
The president’s announcement came weeks after his decision to tax imports of steel and aluminium, followed by planned levies on $50 billion worth of goods from China over what Washington says is theft of intellectual property and technology.
China retaliated by unveiling planned levies on $50 billion worth of major US exports.
Trump’s moves, part of his protectionist America First agenda, have rattled world markets, fearing a trade war between the world’s top two economies could reverse the tentative global recovery.
There are hopes Trump’s headline-grabbing tariffs are part of a plan to take a harsh line as a bargaining tactic towards a deal with China.
And on Sunday, Trump tweeted that he saw an end to the dispute, saying: “China will take down its trade barriers because it is the right thing to do.”
– Russian assets tank –
However top advisor Larry Kudlow, who has often suggested the tariffs might not go into effect, warned Friday the announcements were not negotiating tactics, while Treasury Secretary Steven Mnuchin said the White House hoped to negotiate but acknowledged a trade war was a possibility.
Investors will be keeping a close eye on comments Tuesday by Chinese President Xi Jinping at the Boao Forum — dubbed the Asian Davos — to see if he comments on the brewing row.
Chinese foreign ministry spokesman Geng Shuang on Monday told reporters that trade talks with the US were “impossible” under current conditions.
Russian assets, meanwhile, tanked following a new round of US sanctions targeting President Vladimir Putin’s oligarch allies and their companies as well as senior officials.
Shares in Russian aluminium giant Rusal collapsed, losing nearly 50 percent and putting the metals major at risk of defaulting on part of its debt.
The ruble fell by just under three percent against the dollar, while Moscow’s stock market indices tumbled by around 10 percent.
Source: Brecorder
