FTSE 100 climbs higher on US-China trade war hopes as pound slips
The FTSE 100 opened higher as it mirrored a rise in Asian markets and Wall Street overnight amid growing optimism over US-China trade negotiations.
Buoyed by reports that President Trump may remove tariffs from some Chinese goods, Japan’s Nikkei climbed 1.8 per cent while China’s Shanghai Composite moved 0.5 per cent higher.
Read more: US stocks hit all-time high on trade war optimism
Hong Kong’s Hang Seng also edged up 0.4 per cent, while South Korea’s Kospi ticked up 0.6 per cent.
Global equities were also boosted last night by a round of better-than-expected third-quarter earnings.
The rally, which drove the Dow Jones to an all-time high yesterday, failed to carry over into Europe’s trading rooms this morning despite the FTSE’s climb.
The FTSE 100 rose 0.35 per cent to 7,395 points, boosted by Primark owner ABF’s slight rise in profit and revenue and the positive headlines around the US-China trade war.
Germany’s Dax and France’s Cac both opened flat, however. The pound also fell back below $1.29, hitting $1.288 in early trading.
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“Having seen US markets hit new record highs yesterday, markets in Asia picked up the baton, as the Nikkei 225 hit its highest levels since September 2018, as optimism grew that tensions around trade could well get dialled back further,” said Michael Hewson, chief market analyst at CMC Markets.
He added: “Reports that the US was considering dropping some tariffs on Chinese goods helped oil the wheels further.
Trump had already postponed plans to hike tariffs on $250bn of Chinese goods in mid-October. And reports now suggest the President is prepared to roll back a 15 per cent tariff on $112bn of Chinese goods, levied in September.
“The move would be a critical step in agreeing this deal,” Markets.com’s chief market analyst, Neil Wilson, said.
Read more: US stock markets hit all-time highs on trade war optimism
“If all of this is accurate, the US has blinked. There is a real mix of factors going on here – mainly to do with the presidential election next year. It seems that tariffs are hurting voters in some important states. And at a time of impeachment fears, Trump could do with a ‘win’ on trade soon.
Oanda analyst Craig Erlam said it was “a clear sign that Trump is keen to get a win after years of talk”.
“It also shows that this deal isn’t going to be as one-way as was initially sold,” he added.
“As far as investors are concerned, it’s a massive win and further alleviates recession fears that gripped the markets earlier this year. If the two sides can get this deal over the line in the coming weeks, the Santa rally may well come early this year.”