Global stocks surge on hopeful signs from US-China trade talks

Global stocks surge on hopeful signs from US-China trade talks

Global stock markets leapt yesterday as positive signs emerged from China-US trade talks aimed at averting an escalation of a tariff war between the world's top two economies.

The White House said that two days of high-level negotiations in Beijing "led to progress between the two parties" while Chinese President Xi Jinping announced the talks would continue in Washington next week.

"Investors are still hopeful on constructive resolution to US-China trade talks," VTB Capital analyst Neil MacKinnon told AFP.

Wall Street opened higher on the news, following the lead of Frankfurt's DAX 30, which jumped 1.8 per cent in afternoon trading, with the Paris CAC 40 up 1.8.

Madrid's IBEX 35 index was up 1.7 per cent after Spanish Prime Minister Pedro Sanchez called an early general election, following the rejection of his draft budget in parliament.

"There is more political uncertainty in Europe as Spain will hold a snap election," said David Madden, analyst at CMC Markets UK.

London's index rose as stronger than expected UK retail sales were reported for January, and consumers seemed to shrug off Brexit blues.

However Prime Minister Theresa May suffered another parliamentary defeat yesterday as she seeks changes to the Brexit deal ahead of the UK exit from the EU on March 29.

The dollar was up versus the euro, while Brent crude oil hit a 2019 high on tighter supplies caused by a dip in overall OPEC output and a crisis in cartel member Venezuela.

Brent North Sea reached $65.71 per barrel, the highest level for almost three months.

Earlier in Asia, equity markets had closed sharply lower as Chinese inflation eased more than was expected, also reflecting sluggish demand.

But investor hopes were buoyed yesterday after President Xi said US-China "consultations between the two teams have made important step-by-step progress".

"Next week the two sides will also meet in Washington. I hope that you will continue to work hard to promote a mutually beneficial and win-win agreement," Xi said.

On the US side, Trade Representative Robert Lighthizer said that while there was more work to do, they had made progress.

"We have had two very good days of negotiations," Lighthizer told Xi. "We have additional work to do, but we are hopeful."

American and Chinese officials had gathered in a bid to resolve their trade differences before US President Donald Trump's March 1 deadline for escalating tariffs on $200 billion of Chinese imports. 

Michael Hewson, chief market analyst at CMC Markets UK, said the week's talks seemed to have created a framework for more discussion to resolve the issue.

"Ultimately it appears that conciliation appears to be the name of the game, in expectation of a truce beyond March 1," he said.

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