February 24, 2019 / 11:31 PM / 7 months ago

World shares climb after Trump delays tariffs on Chinese imports

LONDON (Reuters) - World stock markets rose on Monday after U.S. President Donald Trump said he would delay a tariff hike on Chinese imports, buoying hopes of a resolution to a trade war between the world’s two biggest economies.

European stocks added 0.2 percent to touch their highest since October, following stronger gains by their Asian peers. Germany’s trade-sensitive DAX led the way, with the China-exposed auto sector gaining ground.

The Dow Jones and Nasdaq - both basking in nine straight weeks of gains - were also set to open higher.

Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods planned for March 1 after “productive” trade talks, adding that he and Chinese President Xi Jinping would meet to seal a deal if progress continued.

The U.S. president cited progress in areas including intellectual property protection, technology transfers, agriculture, services and currency.

Trump’s tweeted remarks offered the clearest sign yet that Washington and Beijing are moving towards a deal to end a dispute that has dragged on for months, impacting global growth and disrupting markets.

The comments were set to embolden larger, risk-averse investors to make clear moves after weeks of guesswork on the direction of the U.S.-Sino trade talks, analysts said.

“The people ...who previously weren’t sure have come out,” said David Madden of CMC Markets. “We could see a continuation of the upwards move (at) a more aggressive rate than we have previously seen it.”

By mid-morning, MSCI’s world equity index, which tracks shares in 47 countries, was up 0.2 percent at its highest since October.

Dow Jones and Nasdaq futures gained 0.5 and 0.7 percent respectively.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.8 percent, touching its highest since September. It is up 10 percent so far this year.

Chinese blue chips scaled their highest in eight months on the back of a 6 percent gain, their biggest daily increase since July 2015. They are up nearly a quarter this year.

The Japanese benchmark Nikkei also gained, closing half a percent up at its highest since December.

PATIENT POWELL?

A dovish shift from the U.S. Federal Reserve, which has set aside rate hikes for now, has also helped. Fed Chairman Jerome Powell will testify on U.S. monetary policy on Tuesday and Wednesday.

“Expect him to emphasize patience, stating that any more hikes this year would likely require some pickup in inflation,” wrote analysts at TD Securities in a note.

Participants in currency markets shared that sentiment.

“We expect more of the same..., with Powell generally supportive of risky assets,” said Adam Cole, chief currency strategist at RBC Market.

“We think the mood of optimism and better bid for risk is probably something we live with for the week.”

The trade news was largely priced in to currency markets, with the risk-on mood nudging the dollar down 0.1 percent against a basket of currencies to 96.518.

The euro ticked up 0.1 percent against the greenback, trading around $1.1350 and staying within the $1.1213/1.1570 range that has held since mid-October.

Sterling was idling at $1.3069, with markets awaiting clarity on the direction of Brexit talks.

Britain’s government is considering different options, including possibly delaying Brexit, if parliament fails to approve the deal Prime Minister Theresa May struck with Brussels.

FILE PHOTO: A man looks on in front of an electronic board showing stock information at a brokerage house in Nanjing, Jiangsu province, China February 13, 2019. REUTERS/Stringer

The British premier on Sunday postponed a vote on the deal until just 17 days before Britain’s scheduled March 29 departure from the European Union, setting up a showdown with lawmakers.

In commodities, oil prices edged up toward 2019 highs on the trade news, and as sanctions and political uncertainty tightened supply in several producer countries.

International Brent crude oil futures were at $67.28 a barrel by late morning, up 0.2 percent from their last close.

Reporting by Tom Wilson; Editing by Janet Lawrence and John Stonestreet

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