US Treasury secretary Mnuchin says the trade war is ‘on hold’, bringing cheer to nervous markets
- Latest: FTSE 100 has jumped through 7,800 points
- But the pound has hit a near six-month low
- Introduction: America and China reach consensus on trade
- Breakthough means tariffs won’t be imposed
- Markets have rallied in Asia…Europe to follow suit
- Experts: This peace may not last
The pound has hit its lowest level since the start of the year.
While traders aren’t worrying about trade wars, they are getting jittery about Brexit again.
This backstop has been one of the sticking points in talks with the EU27 and some in Westminster believe it could become the post-Brexit norm if Brussels accepts the UK’s proposal.
But Johnson insisted: “Brexiters fearing betrayal over the customs backstop must understand that the PM has been very clear that it is not an outcome we desire; we want a deal with the EU and she will deliver it.”
Metal prices are also getting a small lift this morning.
Reuters has the details:
Copper edged higher on Monday after China and the United States put their trade row “on hold”, easing concerns that the dispute could escalate, although headwinds from a stronger dollar capped further gains.
“It appears that America and China have moved towards a trade deal, which will mean the expansion of U.S. goods purchased by China, and thus, avoiding the prospect of an out-and-out trade war,” said Kingdom Futures in a report.
The FTSE is continuing to climb to fresh record levels, putting 8,000 points in its sights (I don’t think we’ll get there today, though!).
Connor Campbell of City firm SpreadEx says:
After intermittently fretting over signs that hostile relations were heating back up between the US and China last week, Treasury Secretary Steven Mnuchin’s claim on Sunday that a trade war was ‘on hold’ has sent a – cautious – wave of relief through the market.
The US dollar has hit its highest level in five months, against a basket of other currencies.
That’s another sign that traders are comforted that the US and China have frozen tariffs on a swathe of exports – something that could have hurt the American economy.
Hussein Sayed, chief market strategist at FXTM, reminds us that America and China haven’t actually hammered out a full agreement on trade yet.
Sayed points out that details of the truce remain vague.
This was the second round of trade negotiations without clearly defined targets, suggesting that there’s still a long way to go.
Today, a trade war may have been averted, but according to the joint statement from both countries, nothing is being guaranteed apart from China promising to increase American imports
Boom! The UK’s FTSE 100 index has burst to a new-alltime high this morning.
The Footsie gained 35 points, or 0.45%, to 7814 points for the first time ever.
Although there’s relief that the US and China have stepped back from a trade war, analysts are also cautious.
Tai Hui, chief market strategist for Asia Pacific at JP Morgan, predicts further clashes between the two sides:
Historical precedents suggest the U.S. could re-engage with China on trade issues if it sees China dragging its feet on fulfilling its pledges. Moreover, the last three months have further exposed Washington’s concerns over China’s advancement in technology and its threat as a competitor, both commercially and strategically.
It’s like a back pain that never goes away. It was a shock in the first instance it happened, but then life goes on as the most acute symptoms are addressed. The good news is that markets should learn to live with it and consider its impact more rationally.”
“The fundamental differences on trade and other economic issues remain unresolved.”
The undeclared “trade war” between US and China has been put on hold according to US Treasury Secretary Mnuchin as the two superpowers agree on a economic truce.
This development puts the planned tariffs on hold while the two countries work on a plan to re-balance their trade relations and dampens the geopolitical risk.
Britain’s blue-chip share index of top shares is likely to smash through 7,800 points for the first time ever today.
City traders are predicting a rally in London, thanks to the new spirit of detente between the US and China over trade.
US and China stepping back from the brink of a trade war has lifted sentiment, boosting equity indices, putting the FTSE on track for a fresh record high.
Asian equities have bounced and Europe points to a higher start, as Trump’s administration halts plans to impose trade tariffs on China, whilst China promises to significantly increase its purchase of US farm exports and energy.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s going to be a positive start to the marketss after U.S. Treasury Secretary Steven Mnuchin declared the U.S. trade war with China “on hold” following an agreement to drop their tariff threats that had roiled global markets this year: https://t.co/kwwvvVNoZp pic.twitter.com/kLyqeHdaLZ
“We’re putting the trade war on hold, right now, we have agreed to put the tariffs on hold while we try to execute the framework.”
Related: US and China put trade war ‘on hold’
– Asian equity markets traded mostly positive with sentiment underpinned following the conclusion of the 2nd round of US-China trade talks
– China agreed to purchase more goods to avoid a trade war. Mnuchin announced that tariffs on China would be placed on hold as discussions progress
Concerns about an escalation in tensions between China and the US appear to have been deferred in the short term after progress in trade talks at the weekend.