The friendlier stance that the United States has taken on its trade relationship with China led global stock markets slightly higher yesterday, despite a two per cent slide in Chinese equities, and drew the US dollar towards its second straight day of gains.
US President Donald Trump’s administration unveiled a plan for a stronger security review process of foreign investors acquiring American technologies, softening its tone from previous remarks indicating it would specifically block Chinese investments.
By mid-morning, the Dow Jones Industrial Average rose 185.82 points, or 0.77 per cent, to 24,468.93, the S&P 500 gained 13.14 points, or 0.48 per cent, to 2,736.2 and the Nasdaq Composite added 12.14 points, or 0.16 per cent, to 7,573.76.
Gains were capped by investors’ persistent concerns about the volatility in US-China trade rhetoric. The pan-European FTSEurofirst 300 index rose 0.90 per cent and MSCI’s gauge of stocks across the globe gained 0.10 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.24 per cent lower, while Japan’s Nikkei lost 0.31 per cent.
Losses were led by China, where Shenzen-listed blue chips sank 2.1 per cent to a whisker above 13-month lows. Chinese equities have now fallen into so-called bear market territory, having tumbled 20 per cent from recent peaks.
Political concerns in Europe are also worrying investors at the margin as a fight over migration policy in Germany’s coalition government rumbles on, raising concerns that the euro zone’s biggest economy could be headed for snap elections. That also contributed to pushing eurozone yields lower, with German yields edging toward one-month lows.
The dollar index, which measures the greenback against a basket of six currencies, was up 0.44 per cent at 95.075, on pace for its second straight day of gains.
Gold prices slipped to a six-month as the dollar strengthened, making bullion more expensive for buyers using other currencies.
The move takes gold’s losses this month to more than 3 per cent driven by a dollar rally, a large decline in gold held by exchange traded funds and a sharp fall in speculative bets on higher prices.
In oil markets, prices rose on supply disruption in Canada, falling US crude stocks, uncertainty over Libyan exports and US demands that importers stop buying Iranian crude from November.