Stocks higher tracking US-China trade hopes, UK political turmoil

London Stock Exchange (AFP pic)

LONDON: Stock markets around the world rose Wednesday as investors tracked growing optimism that China and the United States will reach a trade deal and as the UK faced more political turmoil with the resignation of three government MPs over Brexit.

Among currencies, the yuan was among the big gainers following a report that the US has called on China to stabilise the unit as part of any agreement between the world’s top economic powers.

The pound was lower versus the dollar and euro as British Prime Minister Theresa May heads to Brussels later Wednesday to renew her quest to reopen the terms of the country’s Brexit divorce, but appears headed for disappointment.

With less than six weeks until Brexit day, European Commission president Jean-Claude Juncker has agreed to meet May once again, but EU leaders insist they will not restart negotiations.

“I have great respect for Theresa May, for her courage and her assertiveness. We will have a friendly talk tomorrow but I don’t expect a breakthrough,” Juncker said Tuesday.

In a further blow, three MPs on Wednesday quit Britain’s governing Conservatives over Brexit, saying the issue had “re-defined” the party and was “undoing all the efforts to modernise it”.

The trio added that they planned to sit in parliament alongside eight former Labour lawmakers who, also citing their opposition to Brexit, resigned from the main opposition party this week to form the new Independent Group.

Analysts said the resignation of Tory MPs could help trigger a snap general election in the UK.

“With Jean-Claude Juncker claiming he does not expect a breakthrough during Wednesday’s meeting with Theresa May and three Tory MPs defecting from the party… the pound was in a bad mood,” said Connor Campbell, analyst at traders Spreadex.

Talks ‘going well’: Trump

London’s benchmark FTSE 100 index was higher overall despite a near 16% slump in the share price of British supermarket group Sainsbury’s.

The group’s shares fell after UK regulators warned that a planned mega-merger of Sainsbury’s and Walmart-owned Asda raises “extensive competition concerns” and could spark higher prices and less choice.

Wall Street opened slightly higher after US President Donald Trump said trade talks with China — which resumed in Washington on Tuesday — were “going very well” but were “very complex”.

He also indicated he could push back the deadline for talks to be concluded — Mar 1, when US tariffs on Chinese goods are due to more than double — saying it is “not a magical date”.

Observers say that while there are no details about the negotiations the fact they are still talking and that China appeared responsive to the call for yuan stability was good news.

The upbeat mood on trading floors gave investors confidence to buy higher-risk currencies on Wednesday, including the yuan and South African rand.

Key figures around 1440 GMT

London – FTSE 100: UP 0.5% at 7,219.87 points

Frankfurt – DAX 30: UP 0.5% at 11,368.54

Paris – CAC 40: UP 0.5% at 5,184.90

EURO STOXX 50: UP 0.3% at 3,249.79

New York – DOW: UP 0.1% at 25,903.38

Tokyo – Nikkei 225: UP 0.6% at 21,431.49 (close)

Hong Kong – Hang Seng: UP 1.0% at 28,514.05 (close)

Shanghai – Composite: UP 0.2% at 2,761.22 (close)

Euro/dollar: DOWN at $1.1331 from $1.1342 at 2130 GMT

Pound/dollar: DOWN at $1.3024 from $1.3062

Euro/pound: UP at 87.00 pence from 86.80 pence

Dollar/yen: UP at 110.85 yen from 110.58 yen

Oil – Brent Crude: DOWN 49 cents at US$65.96 per barrel

Oil – West Texas Intermediate: DOWN 32 cents at US$56.13 per barrel