Trade war fears ease global markets surge

Traders switched their screens on to a sea of green this morning, what a change from a week ago! European bourses have surged higher in early trade, following an impressive rebound on Wall Street overnight as trade fears eased considerably.

Traders switched their screens on to a sea of green this morning, what a change from a week ago! European bourses have surged higher in early trade, following an impressive rebound on Wall Street overnight as trade fears eased considerably.

China and the US have made significant progress in trade talks, with China potentially also being offered an exemption by Trump. 

So many exemptions and suddenly the whole show is looking a lot like a negotiating tool rather than any serious intention to imitate a trade war, easing market fears considerably.

The US markets rebounded strongly after China’s pledge to open its markets. An offer by the Chinese to reduce the tariffs on US cars and to buy more semiconductors from the US were well received by the markets; whilst they are modest enough for the Chinese to save face, they also give enough for Trump to claim progress towards a campaign pledge.

The Dow shot up 669 points, the S&P closed 2.7% higher whilst the Nasdaq added 3.3%. 

The Chinese pledge lifted boosted down beaten tech stocks and financials, which have had a particularly rough time over the past few weeks.

FTSE targets 7000

The FTSE has shot up over 1.3%, led by the mining sector, as the index looks to take back the key psychological level of 7000. 

With reduced risk of China heading into a trade war, metal prices rallied overnight, translating into a solid pick up by the likes of Glencore and Anglo American in early trade this morning.

Sentiment data in focus

The geopolitical selloff in the dollar on the back of the Russian diplomat crisis, appears to be stabilising. 

After the dollar tested 89.00 overnight a fresh attempt hasn’t been made so far this morning although with the dollar hovering at these depressed levels this could just be a matter of time.

EUR/USD continues to capitalise on dollar weakness, as continues to climb higher, extending gains from the previous session and targeting $1.25. 

Eurozone sentiment indicators will be in focus in the near term, although this may not be supportive of the euro given recent declines in sentiment.

Looking towards the afternoon, US consumer confidence data will take the spotlight. 

After US consumer confidence surged in February to its highest level since 2000, supported by impressive growth in the jobs market and increased disposable income from Trumps tax cuts, investors will be looking for a repeat performance. 

A higher than forecast 131 on the consumer confidence index could help secure some well needed gains for the greenback.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.