Global stocks rallied Friday as US-china trade negotiations yielded a partial deal, while the British pound surged for a second straight session on signs that London and Brussels could still avert a no-deal Brexit.
The US-China agreement, announced in the closing minutes of Friday’s Wall Street session, halts new US tariffs that were scheduled to go into effect next week and includes a chinese promise to ramp up purchases of American farm products.
Expectations of the deal boosted stocks all day, but major US indices retreated from their peaks in the final moments of the session, ending with gains of a bit more than one percent.
Analysts said the stock market’s pullback in the final moments likely reflected disappointment that the interim agreement did not go further, and left in place existing tariffs.
The announcement “sounds a little more limited than we were hoping for,” said FTN Financial’s Chris Low. “Nevertheless it is really good news.”
The pact, characterized by US officials as the first phase in negotiations, capped a rollercoaster week for stocks, with the market retreating early in the week on doubts about the talks, but reversing course midweek as the signs from both sides became more conciliatory.
Beijing and Washington have been at loggerheads for more than a year, with US President Donald Trump emphasizing trade relations with China as a central tenet of his “America First” agenda.
“There was a lot of friction between the United States and China, now it’s a love fest,” Trump said. “It’s beyond a trade deal.”
business groups praised the agreement, but alluded to the unresolved status of the broader trade conflict.
“Although this is a step in the right direction, the uncertainty continues,” said David French, senior vice president at the national Retail Federation.
“We urge both sides to stay at the negotiating table with the goal of lifting all tariffs and fundamentally resetting US-China trade relations.”
Earlier, european stocks also rallied, pushing higher on the positive developments on US-China and Brexit.
European officials were looking ahead to an EU leaders summit next week after an upbeat meeting Thursday between British Prime Minister Boris Johnson and Irish counterpart Leo Varadkar revived hopes about a Brexit deal.
The British pound rallied after the European Commission announced the EU and Britain agreed to “intensify discussions over the coming days.
“The Commission will take stock with the European Parliament and member states again on Monday,” it added, to allow time to draw up the agenda of Thursday’s EU summit.
The announcement also boosted the British pound.
David Cheetham at XTB said the latest developments may “be a pivotal turning point in negotiations” but more “clarity” was needed.
But Fawad Razaqzada at Forex.com also seemed to question the wisdom of buying into the British currency with such abandon despite lacking all the facts.
“Traders are evidently happy to be buying the rumors and will be asking questions later,” he said.
Key figures around 2050 GMT
New York – Dow: UP 1.2 percent at 26,816.59 (close)
New York – S&P 500: UP 1.1 percent at 2,970.27 (close)
New York – Nasdaq: UP 1.3 percent at 8,057.04 (close)
London – FTSE 100: UP 0.8 percent at 7,247.08 (close)
paris – CAC 40: UP 1.7 percent at 5,665.48 (close)
Frankfurt – DAX 30: UP 2.9 percent at 12,511.65 (close)
EURO STOXX 50: UP 2.2 percent at 3,569.92 (close)
Tokyo – Nikkei 225: UP 1.2 percent at 21,798.87 (close)
Hong Kong – Hang Seng: UP 2.3 percent at 26,308.44 (close)
Shanghai – Composite: UP 0.9 percent at 2,973.66 (close)
Euro/dollar: UP at $1.1035 from $1.1005 at 2100 GMT
Pound/dollar: UP at $1.2645 from $1.2443
Euro/pound: DOWN at 87.26 pence from 88.45 pence
Dollar/yen: UP at 108.39 yen from 107.98 yen
Brent north Sea crude: UP 2.4 percent at $60.51 per barrel
West Texas Intermediate: UP 2.1 percent at $54.70 per barrel