Stocks

European shares hit 4-year high on fresh US-China trade deal hopes

Reuters November 27 | Updated on November 27, 2019 Published on November 27, 2019

Export-heavy German shares shrug off weak China data. File Photo   -  Reuters

Export-heavy German shares shrug off weak China data

European shares touched a four-year high in early trading on Wednesday, as comments from US President Donald Trump sparked hopes of an imminent resolution to the drawn-out trade war with China. The pan-European STOXX 600 index was up 0.1 per cent, led by trade-sensitive miners, which gained 0.8 per cent.

Trump said on Tuesday that Washington was in the “final throes” of work on an initial trade agreement, adding to optimism from earlier in the day when Beijing said top negotiators from both countries had reached a consensus on ”resolving relevant problems”.

Read more: US-China trade war: We’re in the final throes of a very important deal, says Trump

“European markets look like they could be heading back up to all-time highs like the U.S. markets, but we're not quite there yet,” said Michael Baker, analyst at ETX Capital. “In the past, you've tended to have a bad response (on the trade deal) at some point, but that doesn't seem to be coming and the markets are enjoying it.”

European shares have crawled towards a record high this month on hopes that the world's top two economies would defuse a trade war that has dulled business sentiment, dented corporate investment and hurt global growth.

But impediments to a truce remain, with a US bill on human rights in Hong Kong being a potential sticking point with China. Reuters also reported last week that the interim deal could slide into 2020, given China's ask for more extensive tariff rollbacks.

Investors have turned to central banks in major economies for clues on monetary policy to stem the global downturn. The European Central Bank cut interest rates deeper into negative territory in September, while the US Federal Reserve has lowered borrowing costs three times this year.

A Reuters poll on Wednesday showed the benchmark European index is expected to hit a record high by the end of next year, underpinned by loose monetary policy and hopes of an orderly Brexit. Export-laden Frankfurt shares were trading flat on Wednesday, largely shrugging off data showing profits at China's industrial firms shrinking at their fastest pace in eight months in October.

German real estate firm Aroundtown jumped 4 per cent to a record high after posting better-than-expected third quarter results and raising its full-year forecast. Finnish ship technology and power-plant maker Wartsila rose 3 per cent as one brokerage raised its rating on the stock and two research firms boosted their price targets.

Published on November 27, 2019
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