News of U.S. Treasury Secretary Mnuchin planning a visit to China had eased fears of a trade war between the two giant economies.
With the United States and China set to negotiate on trade, fears of trade wars between two of the world’s largest economies have begun to ease. As a result stock markets across the globe are showing signs of optimism.
MSCI’s world equity index, which tracks shares in 47 countries, turned positive on Monday, having hit its lowest level since February 9.
With a news report of Wall Street Journal, that U.S. Treasury Secretary Mnuchin was considering a visit to Beijing to begin negotiations, reaching the market, U.S. stock futures surged by more than 1%.
“Exemptions on steel/aluminum tariffs have already been granted for other important trade partners (Canada, Mexico, EU), which suggests the U.S. president is using this approach more for negotiating leverage rather than any real intention to start a global trade war”, wrote Mike van Dulken, head of research at Accendo Markets, while noting a “measured” and “nuanced” response from China so far.
Meanwhile the majority of European stock indices opened higher, with the STOXX 600 benchmark rising marginally by 0.4% and the export-sensitive German DAX rose by 0.5%.
Japan’s Nikkei reversed earlier losses of 1.3% and rose by 0.7%.
Signs of trade wars fears eased and were supported by news reports that South Korea would be exempted from U.S. steel tariffs in a revision of the bilateral trade pact between the two countries.
South Korea’s benchmark share index rose by 0.8%.
However in signs that show that trade wars fears have not completely been erased, although the USD bounced back from its 16-month low against the Japanese yen, it however remained close to its 1-month low against a basket of currencies.
For the first time since January 2018, international Brent crude futures opened above $70 a barrel although it could not sustain this level due to the ongoing trade dispute.
Similarly, spot gold prices hit their five-week highs but quickly turned negative and was trading marginally lower at $1,345.2900 an ounce.