Tuesday 21.30 GMT
What you need to know
- Wall Street gains on government funding optimism
- Global indices cautiously optimistic on trade war hopes
- Michelin profit forecast energises European car stocks
- Iron ore’s advance cools
US stocks ended the day higher on optimism over a tentative deal to avert another government shutdown and encouraging signs that the US and China will advance trade talks this week.
The S&P 500 rose 1.3 per cent, while the Dow Jones Industrial Average and the technology-heavy Nasdaq both advanced 1.5 per cent.
Investors dismissed comments from President Donald Trump that he was “not happy” with a deal etched out by Democrats and Republicans on Monday night that would keep the government open and avoid a shutdown on Friday. The arrangement would provide less than a quarter of the $5.7bn Mr Trump is seeking to build a wall along the Mexican border.
Attempts to strike a deal could be derailed by “a number of separate issues”, said Nick Marro, an analyst at the Economist Intelligence Unit, a research group.
“Potential export controls targeting China, as well as possible moves to ban Chinese telecoms equipment from US networks, are also in the pipeline. Movement forward on these issues could torpedo the trade talks regardless of what happens before March,” Mr Marro said.
In Europe, there was reassuring guidance from Michelin, the tyremaker, which forecast a rise in profits for 2019, easing concern about the outlook for demand and drawing investors into the wider sector. Its shares rose 13.1 per cent, topping the Stoxx 600.
The Europe-wide index inched up 0.9 per cent, with the index tracking car and car parts makers adding 3.21 per cent after Michelin’s update. This eased wider fears about the impact of the trade war on the sector, helping offset a cut to profit forecasts from Nissan.
A cautiously optimistic mood helped global stocks stay positive, with the FTSE All-World index up 1.18 per cent, as investors remained on watch for firm signs of progress in the Sino-US trade talks.
US trade officials are meeting their Chinese counterparts in Beijing this week to try to resolve the trade dispute between the world’s two biggest economies before the end of the month — after which tariffs on about $200bn of Chinese exports to the US are set to increase from 10 per cent to 25 per cent. Mr Trump suggested on Tuesday that he might be open to extending that deadline.
“Don’t get too panicked and don’t get too euphoric. When a deal is arrived at the devil is going to be in the details,” said Matthew Benkendorf, chief investment officer for Vontobel Quality Growth. “There is a wild card and it is Trump — I wouldn’t bet on anything he would do.”
Frankfurt’s Xetra Dax 30 added 1.45 per cent, with London’s FTSE 100 up 0.35 per cent.
Hong Kong’s Hang Seng steadied after an early dip, while in China the CSI 300 index of Shanghai- and Shenzhen-listed stocks climbed 1 per cent, recovering from an intraday slip.
Tokyo’s Topix gained 1.41 per cent, with industrials and other exporters encouraged by a weaker currency.
The dollar index was holding just under the 97 mark after climbing to its highest level since mid-December on Monday.
In China the onshore renminbi, which is constrained by a trading band set daily by China’s central bank, was 0.27 per cent weaker at Rmb6.7740 per dollar after falling 0.7 per cent on Monday as trading resumed. The offshore renminbi was down 0.39 per cent at Rmb6.7741 per dollar.
Japan’s yen slipped further, by 0.08 per cent to ¥110.47 per dollar — its lowest level for the year. The pound was up 0.30 per cent at $1.2893.
A rally for iron ore futures cooled in China amid re-emerging concerns about global economic growth, threatening to cut short an ascent that saw a nearly double-digit jump by prices on Monday.
Iron ore futures on the Dalian Commodity Exchange were 0.5 per cent weaker at Rmb648 ($95.50) a tonne, having surged to Rmb652 a day earlier as Chinese traders returned from their break to a market shaken by deepening supply disruptions from Brazil.
London iron ore contracts also cooled, falling to $87.45 a tonne from $90.20 on Thursday.
Oil prices rose, with Brent crude climbing 1.5 per cent to $62.42 a barrel — a three-session high. West Texas Intermediate was up 1.3 per cent at $53.07 a barrel.
For market updates and comment follow us on Twitter @FTMarkets