Global stocks and oil rise on hopes of US-China trade thaw

Investor confidence picks up as Trump says he is ready to sign phase-one trade deal with Beijing

Investor confidence picked up after the US and China appeared to come a step closer to an initial agreement on how to resolve the nearly two-year old trade war. The S&P 500 reached a record high as economically sensitive stocks such as automakers and miners moved upwards, along with oil and copper.

Chinese President Xi Jinping and US President Donald Trump have been in continuous touch through “various means”, China’s Foreign Ministry said, when asked when and where the two leaders might meet to sign a trade deal, Reuters reported.

Brent crude oil futures rose by about 1 per cent on the day to a six-week high of $62.34 a barrel. The crude price has struggled to break much above $70 a barrel this year, against a slowing economic backdrop and an excess of unused fuel in the global markets, thanks in part to a boom in US shale oil output.

Copper, which is also highly sensitive to fluctuations in the global economy given its importance in the electric and electronics sectors, rose by about 0.4 per cent on the London Metal Exchange to $5,872 a tonne.

On Friday and over the weekend, Trump said he wanted to hold a signing ceremony of a phase-one trade deal in the US and cited Iowa, in the farming heartland, as a possibility, according to Bloomberg News.

The trade dispute between the world’s two largest economies has seen billions of dollars in tit-for-tat tariffs slapped on anything from electronics goods and textiles, to agricultural products over the past year and a half and has already brought a substantial cost to global growth.

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The International Monetary Fund said in its most recent World Economic Outlook on October 17 that it estimates global growth in 2019 will come in at just 3.0 per cent, down from an estimated 3.2 percent in July and the lowest forecast since the financial crisis in 2008-09.

Factory activity in major hubs in Europe, such as Germany, has slowed to multi-month and, in some cases, multi-year lows as a result.

On the broader markets, the dollar rose against a basket of major currencies, reflecting some of the optimism that has infused the equity markets.

In Europe, the Stoxx600 index rose by more than 1 per cent on the day to its highest since January 2018, led by auto sector blue chips, thanks to the prospect of a possible breakthrough in the US-China deadlock. Tyre-maker Continental, Fiat-Chrysler and BMW were among the biggest gainers, along with resources stocks such as copper miner Antofagasta and commodities trader Glencore.

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