China’s Xi pro-trade speech lifts markets - 11.4.2018

US stocks rally as trade tensions ease

US stock indices closed sharply higher Tuesday as pro-trade statements by Chinese President Xi Jinping eased trade war concerns. The S&P 500 rose 1.7% to 2656.87 led by energy and technology shares. Nine of 11 main sectors ended higher. Dow Jones industrial average climbed 1.8% to 24408. The Nasdaq composite index outperformed gaining 2.1% to 7094.30. The dollar weakened further: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, fell 0.2% to 89.60. Stock indices futures point to lower openings today.

Trade tensions eased as Chinese President Xi refrained from stating any retaliatory measures to President Trump’s threat of additional $100 billion import tariffs on Chinese goods, instead saying Beijing plans to cut tariffs on car imports and give foreign companies greater access to financial sector, as well as improve protection of intellectual property. The economic news was also positive: US wholesale prices accelerated in March, rising 0.3% instead of an 0.2% expected increase despite lower energy costs, suggesting rising inflationary pressures. Today at 14:30 CET March consumer inflation report will be released, and accelerating consumer inflation is forecast.

DAX leads European indices rally

European stock markets rallied Tuesday after President Xi Jinping said Beijing will cut car import tariffs and expand foreigners access to financial and manufacturing sectors. Both the euro and British Pound continued gaining against the dollar. The Stoxx Europe 600 rose 0.8%. The German DAX 30 jumped 1.1% to 12397.32. France’s CAC 40 gained 0.8% and UK’s FTSE 100 rose 1% to 7266.75. Indices opened 0.1% - 0.2% lower today.

European indices were buoyed also by 4.7% rally in Bayer after the US Justice Department signaled it no longer objected to chemical group’s $62.5 billion deal to buy Monsanto. Auto maker stocks also rallied, led by Volkswagen, up 4.5%.

Asian markets mixed

Asian stock indices are mixed today. Nikkei fell 0.5% to 21687.10 as yen turned higher against the dollar. Chinese stocks are rising as China’s central bank governor said the daily trading quota for the country’s stock-connect system with Hong Kong’s market will quadruple next month to 52 billion yuan ($8.27 billion) for northbound flows: the Shanghai Composite Index is up 0.6% and Hong Kong’s Hang Seng Index is 0.5% higher. Australia’s All Ordinaries Index is down 0.5% with Australian dollar edging lower against the greenback.

AU200

Brent slides

Brent futures prices are edging lower today as traders expect US inventories rose last week. The American Petroleum Institute late Tuesday report indicated US crude inventories rose by 1.8 million barrels last week to 429.1 million. At the same time the US Energy Information Administration said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected. Prices rallied yesterday: June Brent gained 3.5% to $71.04 a barrel Tuesday. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories.