Global markets rally on US-China deal hopes - 13.12.2019

Dollar weakening halts

US stocks rally was intact on Thursday on US-China trade deal hopes. President Trump tweeted “Getting VERY close to a BIG DEAL with China.” The S&P 500 rallied 0.9% to new record 3168.58. The Dow Jones industrial average gained 0.8% to 28132.05. Nasdaq composite index advanced 0.7% to fresh record 8717.32. The dollar weakening continued at steady pace after the Federal Reserve left interest rates unchanged on Wednesday while New York Federal Reserve said on Thursday it would increase the amount of funds it would inject into the multi trillion dollar repo market: live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, lost 0.4% to 96.72 but is higher currently. Futures on US stock indices point to sharply higher openings today.

FTSE 100 leads European indexes gains as Conservatives win elections

European stock markets advanced on Thursday. Both the EUR/USD and GBP/USD accelerated their climbs yesterday, with Pound higher currently while euro turning lower. The European Central Bank kept its main deposit rate at negative 0.5%, leaving its rate of asset purchases at €20 billion a month, as widely expected by markets. The Stoxx Europe 600 index ended 0.5% higher led by auto, basic resources and bank shares. Germany’s DAX 30 advanced 0.6% to 13221.64. France’s CAC 40 added 0.4% and UK’s FTSE 100 rose 0.8% to 7273.47. Thursday’s general election results show the conservative party won majority.

Nikkei leads Asian indexes rally

Asian stock indices are sharply higher today. Nikkei ended up 2.6% at 24023.10 with yen slide against dollar continuing. Chinese stocks are rising following reports US trade negotiators had offered to cancel new China tariffs and reduce existing levies on Chinese goods by up to 50% on $360 billion worth of imports: the Shanghai Composite Index is up 1.8% and Hong Kong’s Hang Seng Index is 2.3% higher. Australia’s All Ordinaries Index gained 0.5% as Australian dollar halted its climb against the greenback.

Brent advance continues

Brent futures prices are extending gains today. Prices ended higher yesterday after reports Washington and Beijing are very close to signing the phase one trade deal. February Brent crude rose 0.8% to $64.20 a barrel on Thursday. And rising oil prices support the Initial Public Offering (IPO) of Saudi Arabia’s largest oil company – Aramco. Shares of Aramco started trading on the Saudi Stock Exchange, known as Tadawul, on Wednesday. And Saudi Aramco valuation climbed to $2 trillion from $1.7 trillion on its second day of trading yesterday. The IPO is open to investors who have a certain amount of assets, and is structured so that Saudi citizens get extra shares if they stay invested in the company for six months. After six months the company can be listed on other international exchanges.

Gold inching up

Gold prices are recovering today. Prices ended lower yesterday after news China and the US reached a phase one trade deal in principle. February gold lost 0.1% to $1473.40 an ounce Thursday as the uncertainty of the unresolved trade dispute subsided.