Rolling coverage of the latest economic and financial news, as the Chinese stock market enjoys its best day in three and a half years
- Latest: UK and US protect derivatives trading post-Brexit
- Introduction: Trump delays new tariffs on Chinese goods
- Tariffs were due to rise to 25% on March 1
- China’s CSI300 has best day since 2015
Back in Beijing, government officials have said a US-China trade deal is getting closer….
Reuters has the details:
The Chinese government’s top diplomat, State Councillor Wang Yi, told a forum in Beijing on Monday that the talks had made “substantive progress”, providing positive expectations for the stability of bilateral ties and global economic development, China’s Foreign Ministry said.
China’s official Xinhua news agency said in a commentary that the goal of an agreement was getting “closer and closer”, but also warned that negotiations would get more difficult as they approached the final stages.
The post-Brexit derivatives deal hammered out by the US and the UK should be welcomed by the City – here’s the latest reaction:
A no-deal Brexit is now unlikely to blow up the derivatives markets after a deal struck by US and UK regulators
“London is, and will remain, a global centre for derivatives trading and clearing,” said Christopher Giancarlo, chair of the US CFTC
Britain and U.S. seek to allay fears of disruption in the multitrillion-dollar derivatives market in the event of a no-deal Brexit https://t.co/OHzCrOr9aF via @sabrush #tictocnews pic.twitter.com/YwBt8gIFqw
UK and US regulators build Brexit ‘bridge’ for derivatives https://t.co/cgiMn2xlSz
Just in: The UK and the US have reached an agreement to ensure that derivatives trading can continue between the two countries after Brexit.
The deal means that City banks and clearing houses will be free to provide services to US clients as they do today, under existing EU rules. This continuity could protect a massively important part of London’s financial sector, as it braces for Brexit disruption.
What happens in global derivatives markets has a material impact for the man or the woman on the Clapham Omnibus, the Santa Monica freeway or the Tokyo subway.
Share in European carmakers have jumped by over 1.5% this morning, to their highest level since last November.
Many EU auto firms have factories in China and/or the US, so would have suffered from increased tariffs on imports between the two countries.
Here’s our news story on Karren Brady’s departure from Taveta:
Newsflash: Baroness Karren Brady has resigned as chair of the company behind Sir Philip Green’s retail empire, Taveta Investments.
“Taveta would like to announce that Karren Brady and Sharon Brown (in their respective capacities as non-executive chairman and non-executive director) have resigned from its board. Taveta thanks them for their contribution and wishes them well for the future.
Taveta is in active discussions with individuals who have significant relevant experience and expects to make a further announcement as to the composition of its board shortly.
With just 32 days to go until Brexit Day, UK businesses are becoming increasingly – and understandably – anxious.
The finance director of Associated British Foods has warned that it’s “unbelievable” that a no-deal Brexit is still on the table.
“For it even to be contemplated – a hard Brexit where you’ve got no arrangement with your major trading partners and when we’re so reliant on them for the food supply chain – I find it unbelievable.
“The consequences of getting this wrong for people are major and I want people to understand that.
Britain’s housebuilders are bucking the trend this morning, as they slide to the bottom of the FTSE 100 leaderboard.
Since Government’s Help to Buy policy was introduced, Persimmon’s profit per house has gone from £22,114 in 2012 to £60,219 in 2018. Half of the homes they built last year were sold under Help to Buy.#ukhousing #help2buy #persimmonhttps://t.co/9xiuJ6i8aD pic.twitter.com/NqAlv9YH8Q
Wall Street is expected to hit a new 2019 high when trading resumes in New York in under six hours time.
Connor Campbell of SpreadEx says:
With the Asian markets surging to a 5 month high in the aftermath of Trump’s comments, the Dow Jones is set to hit its own 26100-plus, 3 and a half-month peak when it opens later this afternoon.Yet the European indices weren’t anywhere near as giddy, perhaps held back by the ongoing lack of clarity over what exactly is going to happen with Brexit.
China’s stock market has been through a wild year — falling steadily in 2018, before surging back in 2019.
Germany’s DAX index has jumped 0.6% in early trading, as Frankfurt traders welcome the ceasefire in the trade war.
Germany’s economy hasn’t grown since last summer, with exports suffering from trade disruption, so its manufacturers will be hoping that Trump and Xi sign off an agreement soon.
Britain’s FTSE 100 index has jumped by 20 points in early trading to 7198, as the relief rally reaches Europe.
Mining group Glencore is the top riser, up 2%. Demand for its iron ore and coal reserves will rise if a trade war is averted.
Virtually every stock on China’s CSI300 index rose today, with financial stocks and technology companies leading the sizzling rally.
Scores of stocks were suspended after jumping more than 10%, which is the largest gain allowed by Chinese regulators.
Tai Hui of J.P. Morgan Asset Management takes a cautious line, saying:
“The latest news may not offer a significant boost to start the week. Nonetheless, it helps to underpin positive investor sentiment.”
The US-China trade war has been a big culprit behind the recent slowdown in the global economy, so there should be widespread relief that it isn’t about to get any worse.
Hussein Sayed, chief market strategist at FXTM, argues that economic and political pressures forced Donald Trump to give China more time to reach a trade deal.
The trade dispute has been a painful one for both countries and the world, especially since it occurred when the economic cycle approached a peak. While China wants to prevent a hard landing, President Trump wants to fulfill one of his key campaign promises to correct the trade deficit. However, to support his re-election bid, Trump needs to avoid dragging down the U.S. economy and thus announce a deal, even though it might not look like a perfect one.
Equity markets in mainland China were the main beneficiaries of Trump’s announcement on extending the 1 March deadline. The blue-chip CSI 300 Index surged 4% today, hitting its highest level since June 2018; it has entered a bull market, rising more than 23% from January lows. The Chinese Yuan also strengthened 0.4%, reaching a 7-month high.
Turnover on the Chinese stock exchanges has been huge today, after president Trump removed the threat of raising tariffs at the end of this month.
The turnaround in the Chinese stock market this year is quite something, even before today’s surge:
Booooooming day in Chinese equities, for the Europeans just getting up. The two weeks since Lunar New Year ended have been massive pic.twitter.com/H8KkJXvv4p
Chinese stocks had their best day in three and a half years after Donald Trump said the US will delay an increase in tariffs on $200bn of goods from Chinahttps://t.co/hXGrquyW3m pic.twitter.com/f3B4QN4tmZ
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very……
….productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!
Nothing has been confirmed and we think it will be impossible for China to conform to US demands on substantive core issues. But that’s for another day.
China’s official Xinhua news agency echoed Trump’s comments and said the two sides “came a step closer to realising the important consensus reached” by Trump and Xi Jinping when they agreed to a trade war truce in December. The delegations agreed to “carry out follow-ups in accordance with the instructions of the two heads of state”.
The delay in tariffs was the clearest sign yet of a breakthrough the two sides have sought since calling a 90-day truce in a trade war last year. It will likely be cheered by markets as a sign of an end to the year-long dispute that has disrupted commerce worth hundreds of billions of dollars of goods and slowed global economic growth.