GLOBAL stocks mostly rose on Tuesday as traders welcomed signs of apparent progress in the US-China trade standoff.
European equities closed solidly firmer, while Wall Street posted its third straight positive session, in a welcome bounce after December’s rout.
Trade talks in Beijing were set to continue on Wednesday in the first face-to-face meetings since US President Donald Trump and Chinese President Xi Jinping agreed to a tariff truce on December 1.
The Wall Street Journal reported the two sides were narrowing their differences, with Chinese officials offering greater purchases of US goods and services and Cabinet-level follow-up meetings expected later this month.
“After a terrible end to 2018 which saw global equities plummet, markets are finally seeing the colour green returning to their screens,” said FXTM chief market strategist Hussein Sayed.
Key factors that dragged stocks lower at the end of the last year included the US-China trade standoff, worries over slowing global growth and rising political uncertainty in Washington, most recently over the US government shutdown over Trump’s desire for $5 billion to build a wall on the border with Mexico.
But US Federal Reserve Chair Jerome Powell soothed markets last week by pledging a more cautious approach to further interest rate hikes. And the newest headlines on the Beijing talks offered further hope.
The latest stories on trade talks suggest trade tensions “are not as dire as expected”, said Manulife Asset Management macroeconomic strategy head Frances Donald.
And while “there are downside risks that continue”, Donald said the rebound over the last few sessions showed investors see the market has an upside as well.
JP Morgan Asset Management Asia-Pacific chief market strategist Tai Hui said: “While we don’t expect a full resolution in trade tension between China and the US in the foreseeable future, small steps in progress are likely to be taken favourably by investors.”
On the corporate front, Samsung forecast a nearly 30 per cent drop in operating profit for the December quarter – causing its shares to close down 1.7 per cent.
The South Korean behemoth cited “lacklustre demand in the memory business and intensifying competition in the smartphone business”, fanning worries about the wider technology sector.
The news follows Apple’s announcement downgrading its sales forecast due to weakness in China.
But Apple shares gained 1.9 per cent after CEO Tim Cook expressed confidence in the company’s technology pipeline in spite of recent criticism, telling CNBC the company had been underestimated before.