LONDON: World stock markets roared higher Tuesday as fears eased over US President Donald Trump’s planned trade tariffs, dealers said.
Asia surged, after an overnight Wall Street rally, as shock over Trump’s controversial tariffs move gave way to hope that any measures will not be as bad as initially thought.
European indices followed suit with bumper gains as dealers bet that Trump would not push through with extreme protectionist policies, while concerns dimmed also over an inconclusive Italian election.
Republican Trump had sparked fears of a global trade war late last week when he unveiled plans to slap levies on imports of steel and aluminium, sending share prices tumbling.
Markets remain hopeful however that the tariffs — and a damaging trade war — could still be averted, according to Russ Mould, investment director at stockbroker AJ Bell.
“Investors seem to be hoping that opposition from his own Republican Party will persuade President Trump to abandon his plan to impose tariffs on steel and aluminium, as America’s trade partners make noises about getting in some rapid retaliation,” he said.
– Automakers accelerate –
European automakers revved higher, having lost speed so far this week on worries over a trade war that could have hurt valuable exports into the United States.
Frankfurt stocks rallied 1.1 percent, with Volkswagen jumping almost three percent, while Daimler and BMW each added 1.3 percent in late morning deals.
“A strategic target — and standing to lose the most from any possible trade war — the German auto sector is rebounding sharply, helping lift the DAX higher,” noted Interactive Investor analyst Rebecca O’Keeffe.
Paris stocks gained 0.7 percent, with Renault and Peugeot winning 2.4 percent and 1.1 percent respectively.
And Milan’s benchmark FTSE MIB shares index rebounded 1.0 percent, having shed 0.4 percent the previous day on Italy’s uncertain election outcome.
Outside of the eurozone, London stocks jumped 0.9 percent with packaging giant Smurfit Kappa soaring almost a fifth after it rejected an “unsolicited and highly opportunistic” takeover bid from US peer International Paper.
– Bargaining tactic –
All three main indices on Wall Street rose between one and 1.4 percent on Monday, as dealers cast off fears of trade Armageddon.
US investors concluded Trump’s threats to impose sweeping steel and alumium tariffs with no exemptions for key allies like Canada and Mexico, could be a bargaining tactic to get his way in talks to renegotiate the North American Free Trade Agreement.
The president’s surprise announcement that he plans to impose tariffs of 25 percent on steel imports and 10 percent on alumium sparked a fierce global response.
Trump unexpectedly won the US presidency in November 2016 on a protectionist “America First” platform, promising to pull out of global trade deals which he said were hurting US workers.
Source: Brecorder.com
