Stocks rally as investors watch trade talks – Financial Times

Monday 10.30 GMT

What you need to know

  • China and Hong Kong stocks advance as trade talks begin
  • European stocks follow, gathering pace as the session develops
  • Onshore renminbi weakens as traders return from lunar new year break
  • Sterling falls as UK month-on-month growth data misses forecasts for December

Hot topic

Chinese stocks climbed on Monday and European bourses followed, as US-China trade talks began in Beijing and Shanghai markets returned from a five-day break.

After a lacklustre start in Europe, indices picked up speed as the morning wore on and US futures also gathered momentum.

US-China trade talks resumed with Robert Lighthizer, the US trade representative, and Steven Mnuchin, the Treasury secretary, set to meet Chinese vice premier Liu He this week in Beijing, following a round of lower-level talks starting on Monday.

As Europe gathered pace, the region-wide Stoxx 600 added 1 per cent, with sectors exposed to the trade war rising. The Stoxx index tracking industrial metals makers rose 1.8 per cent and the benchmark for technology stocks rose 1.2 per cent.

According to US futures trade, the S&P 500 was set to rise 0.5 per cent in opening trade

The pattern came after the CSI 300 index of mainland Chinese stocks was up 1.8 per cent, its highest point in almost three months, after opening lower as trading resumed after the lunar new year holiday.

US President Donald Trump last week ruled out a meeting with his Chinese counterpart Xi Jinping before a March 1 deadline, shattering hopes of an agreement to avoid an escalation in tariffs when the truce ends. If Washington and Beijing do not strike a deal by the deadline, tariffs on about $200bn of Chinese exports to the US will rise from 10 per cent to 25 per cent.

ANZ analysts said “the absence of a planned meeting between the two heads of state before March is overshadowing sentiment”.

In Hong Kong, the Hang Seng index was up 0.5 per cent, led by technology stocks.

The Hang Seng China Enterprises Index of large-cap Chinese companies listed in Hong Kong was up 0.5 per cent.

Australia’s S&P/ASX 200 was down 0.6 per cent as financials shed 1 per cent, with shares in the country’s four major banks all retreating.

Markets in Japan were closed for National Foundation Day.

The moves in Asia Pacific on Monday came after the S&P 500 and the Nasdaq Composite each closed Friday’s session up 0.1 per cent.

Forex

The dollar index touched a new six-week high just under 97 points.

The onshore renminbi, which is permitted to trade 2 per cent to either side of a daily midpoint set by the People’s Bank of China, was 0.5 per cent weaker at Rmb6.7765 to the dollar. The offshore renminbi was flat at Rmb6.7868.

Sterling was 0.4 per cent weaker at a session low of $1.2901 after UK GDP data were weaker than forecast for December. It showed a month-on-month contraction of 0.4 per cent, having been expected to stay flat.

The euro was 0.1 per cent weaker at $1.1317 and the Japanese yen slipped 0.2 per cent to ¥109.79 per dollar.

Commodities

Oil prices retreated, with Brent crude down 0.9 per cent at $61.56 a barrel and US marker West Texas Intermediate falling 1.3 per cent to $52.04.

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