Stock markets went their separate ways yesterday on US-China trade deal uncertainty, while oil prices retreated.
After Asian equity markets jumped in an echo of strong worldwide gains on Tuesday, European indices were lower approaching the half-way mark.
The dollar was steady against main rivals, while the euro won some support from official data showing a rebound in first quarter German growth.
“The fears over the possibility of a substantial reversal of trade war progress has added a substantial amount of volatility to markets, yet as the past 24-hours has shown, markets still exhibit hope that we could see some form of resolution emerge from this current standoff,” noted Joshua Mahony, senior market analyst at IG trading group.
After more than doubling tariffs on $200 billion of Chinese goods last week US President Donald Trump has threatened to hit a further $300 billion with more levies if he does not get his way in high-stakes talks.
However, in a series of tweets Tuesday, Trump gave markets some hope that a deal between the titans will eventually be struck.
The remarks, while again accusing China of backsliding in the trade talks, provided some optimism as did weak Chinese economic data that fuelled hopes for growth-boosting measures.
Shanghai's main stocks index ended 1.9 per cent higher and Hong Kong put on 0.5 per cent.
Meanwhile, both the US and China have said they will resume talks in Beijing but with no date yet set, dealers are looking ahead to a possible powwow at the G20 in Japan at the end of June.
Oil prices dropped following a surprise rise in US crude stockpiles – but remained propped up by tensions in the Middle East.
Saudi Arabia, the world’s top crude exporter, yesterday said that attacks on two of its tankers and a major pipeline targeted the security of global oil supplies.
Drone attacks claimed by Iran-aligned Yemeni rebels shut down one of the kingdom’s main oil pipelines on Tuesday, further ratcheting up Gulf tensions after the mysterious weekend sabotage of four ships, two of them Saudi tankers.
The International Energy Agency confirmed that the world's oil supply fell last month as US sanctions on Iran tightened and OPEC+ members produced less crude in line with their pact.
In its latest monthly report on the global oil market, the Paris-based IEA said that while geopolitics and industry disruptions were clouding the outlook it believes that the market balance is set to flip from surplus into deficit, a development that would favour efforts by oil producing nations to keep prices high.