Wall Street sails to new highs on hopes for China trade deal

Dow Jones Industrial Average crossed the 28,000-mark for the first time. (AP pic)

NEW YORK: Wall Street’s faith in an imminent breakthrough in US-China trade talks sent stocks sailing to fresh all-time highs on Friday.

Stocks elsewhere mostly posted more modest gains, with London creeping forward despite a pledge from Britain’s opposition Labour Party to nationalise parts of telecoms giant BT and offer free broadband internet.

Though truces have broken and hopes have been dashed more than once before, positive signals from the White House helped all three major Wall Street indices set new records as the benchmark Dow Jones Industrial Average crossed the 28,000-mark for the first time.

“The biggest driver to new highs was about trade, positive comments coming out of DC,” particularly remarks by top White House economic advisor Larry Kudlow on the possible signing of a US-China trade deal, Bill Lynch of Hindsale Associates told AFP.

The two sides have made “enormous progress” on finalising the partial deal President Donald Trump announced last month, Kudlow said late Thursday, adding to American officials’ positive signals in recent days.

In Britain, meanwhile, Labour leader Jeremy Corbyn hit the campaign trail in the city of Lancaster in northwestern England, saying he would bring the parts of BT that deal with broadband into public ownership as part of a sweeping program of nationalisations.

Some relief in Chile

As the overall index closed the week down 0.8%, BT shares dived before paring losses to 1.2% as dealers digested news that its broadcasting division had obtained exclusive broadcast rights to Uefa’s European football matches until 2024.

Corbyn is seeking to seize the initiative from Prime Minister Boris Johnson’s Conservative Party ahead of the Dec 12 election that has been dominated so far by Brexit.

Labour estimates the plan will cost some £20.3 billion (US$26.1 billion), but some analysts were quick to pour cold water on the plans.

“With the party planning to provide free fibre-optic broadband via taxation of big tech firms, this proposal has a wide reach that would essentially wipe out the whole broadband business in the UK,” said IG analyst Joshua Mahony, voicing doubt that such “radical” proposals would emerge as a likely coalition would crimp its room for policy manoeuvre.

Stock markets elsewhere gained ground on resurgent trade war optimism, dealers said.

“The deal is not complete, but we’ve made enormous progress,” Kudlow told reporters in Washington, adding that the talks were “coming down to the short strokes.”

His comments follow a week of unease about the much-vaunted talks, after Trump dismissed Chinese claims of a plan to roll back tariffs as the negotiations progress.

Eurozone stocks were happy to take Asia’s optimistic lead to trade modestly firmer in the afternoon.

In Santiago, Chile, meanwhile, stock prices rose more than 6% after political parties agreed to hold a constitutional referendum, a key demand of protesters to resolve weeks-long unrest.

Chile’s peso rose against the dollar, also boosted by the government’s promise to hold a referendum to change the country’s dictatorship-era constitution.