Stock markets on both sides of the Atlantic mostly softened yesterday after a mixed session in Asia, with investors harbouring growing doubts over the chances of success at US-China trade talks, dealers said.
As China and the US prepare to resume talks, “we have so far learned that China is willing to decrease its trade surplus with the US by substantially increasing the amount of goods and services it purchases”, said Hussein Sayed, chief market strategist at FXTM.
“This sounds like good progress, but it may not be enough to end the trade dispute,” he said.
Key European stock indices, except Frankfurt, were down at the close, with London underperforming as HSBC’s shares slumped on news that the banking titan suffered a tough fourth quarter because of trade war woes.
London’s FTSE 100 fell 0.6% to close at 7,179.17 points; Frankfurt’s DAX 30 was up 0.1% at 11,309.21, while Paris’ CAC 40 lost 0.2% at 5,160.52.
A survey showing that German investor confidence picked up in February gave Frankfurt stocks a minor lift.
The improved ZEW institute’s economic expectations index suggested that “the pessimism will end, eventually”, commented analysts at ING.
Wall Street was directionless in the late New York morning after market players returned to their desks following a long bank holiday weekend.
“Global markets have failed to gain any traction today, as news of further US-China trade talks failed to inspire stocks,” said IG analyst Joshua Mahony.
There was “growing disillusionment over the failure to make any significant breakthrough despite a ramp up in discussions”, he said.
“However, with the top US and Chinese negotiators lined up to meet once again on Thursday, there is still some hope that we will find a positive conclusion.”
Oanda analyst Jeffrey Halley warned of trouble ahead if Chinese and US officials failed to reach a deal.
“Without sounding like a damp squib, there is now a vast amount of ‘optimism’ baked into currency, stock and energy market prices globally and precisely zero concrete detail. The unwind, should no deal be struck, could be very ugly,” he said.
In the meantime, investors will be looking to the release of Federal Reserve minutes today for clues to the direction of US interest rates, but also the pace at which the Fed is likely to reduce its bond portfolio.
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