World share markets regained ground yesterday as news that the United States and North Korea could meet for talks came on top of hopes that President Donald Trump’s political allies would convince him to avoid a global trade war.
The broadest gauge of global stocks, MSCI’s All Country World Index, was up more than 0.6 per cent for a second day and Wall Street looked set for its third rise running as the rebound gathered momentum.
It gained pace as North Korea said it was willing to talk to Washington about denuclearisation and would suspend its long-running nuclear tests while those talks were under way.
Europe’s mood was also supported after Germany reformed its coalition government to end more than five months in political limbo and as the initial unease caused by a hefty election vote for anti-establishment parties in Italy ebbed.
Italian bonds outperformed and shares in Milan bounced almost 1.5 per cent having slipped to a six-month low after its weekend vote.
Europe’s big three – Britain’s FTSE, Germany’s Dax and France’s Cac – were up 0.5 – 1 per cent too, while the euro and pound both climbed as the dollar lost its footing again.
Top US Republicans, including House speaker Paul Ryan, urged Trump on Monday not to go ahead with tariffs on foreign imports of steel and aluminium.
Even though the President said he would not back down, he suggested Canada and Mexico could be exempted if a new Nafta trade deal was agreed. There was speculation that this had been the main motivation behind the plan.
After Wall Street’s S&P 500 had put on more than 1 per cent, Asia’s bourses rallied in concert overnight.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.5 per cent, snapping five straight days of losses. Japan’s Nikkei jumped 1.8 per cent from a five-month low, helped too by reassurances from the head of the Bank of Japan that it would not suddenly end stimulus.
The euro traded back above $1.2410, having extended its recovery from a seven-week low of $1.2154.
In commodities, crude prices held firm, underpinned by robust demand forecasts and prospects for informal contacts sought by Opec with US shale oil producers at an industry meeting in Houston this week.
US West Texas Intermediate crude futures traded at $63.03 per barrel, up 0.7 per cent following a 2.2 per cent gain on Monday.
Bellwether industrial metal copper gained 1.5 per cent in easily its biggest jump this month.
China’s government said on Monday it was confident about keeping its growth rate at around 6.5 per cent this year and yesterday defended a move to hike military spending by the biggest amount in three years.