London (AFP) – Global stock markets were spurred higher Tuesday by Chinese President Xi Jinping, whose remarks have soothed worries over a US trade conflict, dealers said.
Frankfurt equities jumped one percent, London gained 0.4 percent and Paris won 0.7 percent in late morning deals in Europe.
Across in Asia, both Hong Kong and Shanghai each surged 1.7 percent in value, while Tokyo piled on 0.5 percent.
In a closely watched speech at the Boao Forum — dubbed by many observers as the Asian Davos — Xi pledged a “new phase of opening up”, adding that Beijing “does not seek a trade surplus” and wants to boost imports.
Dealers pounced on the comments as a sign that a possible trade war between the world’s top two superpowers can be averted.
“Investors took this as an effort to calm the US-China war of words on trade … boosting hopes of a balanced outcome that avoids disruption to global growth,” said Accendo Markets analyst Michael van Dulken.
Investor sentiment has been rocked in recent weeks as the White House has announced a series of tariffs mostly on Chinese goods as part of his “America First” protectionist agenda, fuelling fears of potentially devastating tit-for-tat measures that could hammer the global economy.
China’s massive surplus with the US is a key complaint of Trump’s who accuses the country of unfair trade practices that hurt American jobs.
His latest measures on Friday battered US stocks, though hopes the issue can be resolved saw Asia post gains on at the start of this week.
However, on Tuesday Xi said he would move to liberalise automobile investment, significantly reduce tariffs on cars this year and protect intellectual property — all areas that have been high on the list of demands by Washington.
The measures have been high on Trump’s list of grievances against China.
“Xi has succeeded in batting the ball back into the US court, so we now watch and wait for a response,” said IG analyst Christ Beauchamp.
“A firm negative (response) will send equities tumbling back down, but if Mr Trump nods his approval of this first step towards negotiation we might see stock markets edge up once more.”
– Fresh Trump probe woe –
After last week’s plunge, all three main indexes on Wall Street ended in positive territory on Monday.
However they eased from earlier highs after it emerged the FBI had raided the offices of Trump’s long-time personal lawyer.
Michael Cohen has admitted to paying porn actress Stephanie Clifford $130,000. Clifford, who goes by the stage name Stormy Daniels, claims she received the money to cover up a sexual encounter with Trump more than a decade ago.
The move is the latest volley in special counsel Robert Mueller’s probe into possible Russia collusion with Trump’s presidential campaign.
The latest twist adds to the sense of turmoil on Pennsylvania Avenue and Trump slammed the raid as “disgraceful”, a “witch-hunt” and “an attack on our country”.
Adding to uncertainty are geopolitical worries after an alleged toxic gas attack that killed dozens in a rebel-held Syrian town, which prompted Trump to indicate a decision could be taken imminently on military action.
Russia, which backs the Syrian regime, has warned against such a move, saying it could have “grave repercussions”.
Tensions in the Middle East have buoyed oil prices, which extended Monday’s rally.
On currency markets the dollar was boosted by easing trade worries, while it also extended gains against the ruble after Trump slapped sanctions against Russian oligarchs close to Vladimir Putin following the diplomatic crisis sparked by the poisoning of former spy Sergei Skripal.
The US move also hammered Hong Kong-listed aluminium giant Rusal, which lost more than 50 percent in value on Monday and fell a further 8.7 percent Tuesday.
– Key figures around 1000 GMT –
London – FTSE 100: UP 0.4 percent at 7,190.22 points
Frankfurt – DAX 30: UP 1.0 percent at 12,387.90
Paris – CAC 40: UP 0.7 percent at 5,301.11
EURO STOXX 50: UP 0.6 percent at 3,436.55
Tokyo – Nikkei 225: UP 0.5 percent at 21,794.32 (close)
Hong Kong – Hang Seng: UP 1.7 percent at 30,728.74 (close)
Shanghai – Composite: UP 1.7 percent at 3,190.32 (close)
New York – Dow: UP 0.2 percent at 23,979.10 (close)
Euro/dollar: UNCHANGED at $1.2321 from level at 2100 GMT on Monday
Dollar/yen: UP at 107.02 yen from 106.77
Pound/dollar: UP at $1.4163 from $1.4131
Oil – Brent North Sea: UP 93 cents at $69.58 per barrel
Oil – West Texas Intermediate: UP 85 cents at $64.27