Global Selloff Pauses as European Stocks Post Gains
14 May 2019 - 8:19PM
Dow Jones News
By Nathan Allen
European stocks climbed on Tuesday after a downbeat session in
Asia, as investors awaited a resolution to the U.S.-China trade
negotiations following the recent escalation in tensions.
The Stoxx Europe 600 was up 0.4% in morning trading. Germany's
DAX rose 0.3% and the U.K. FTSE 100 gained around 0.6%.
In Asia, Hong Kong's Hang Seng Index dropped 1.5%, Japan's
Nikkei fell 0.6% and Korea's Kospi gained 0.1%
U.S. futures pointed to opening gains of 0.5% for both the
S&P 500 and the Dow Jones Industrial Average, after the two
indexes on Monday each shed 2.4%, their steepest one-day losses
since Jan. 3.
Telecommunications firms led gains in Europe. Vodafone Group
shares rose 2.4% after the company issued an optimistic outlook,
offsetting weak earnings. Industrial stocks were also trading
higher even after statistics showed eurozone industrial production
fell for the second straight month in March, casting doubt on the
sustainability of the economy's first-quarter pickup.
Germany's Bayer AG was among Europe's biggest losers, trading
2.7% lower after a California jury awarded $2.06 billion to a
couple who blamed the company's Roundup weedkiller for causing
their cancer.
Volatility in global markets has surged in recent days, as the
dispute between the U.S. and China intensified after a period of
prolonged calm, prompting renewed concerns about global economic
growth.
On Monday, Beijing hit back against a hike in U.S. tariffs with
proposals to raise its own tariffs on around $60 billion of U.S.
imports. President Trump responded with plans to impose a 25% levy
on a further $300 billion of Chinese goods, including mobile phones
and laptops, as early as this summer.
Mr. Trump didn't rule out the prospect of an accord being
reached within the next few weeks, and said he was prepared to meet
Chinese President Xi Jinping at the coming G-20 summit, stoking
optimism for a successful outcome among some investors.
However, some analysts remained circumspect about the prospects
for a speedy resolution.
"Whilst Trump's comments offered some support to market
sentiment overnight, we suspect it will take more than that to
repair the damage done," said London Capital Group's Head of
Research Jasper Lawler in a note. "Investors will want to see
concrete evidence of progress after Trump's 180-degree turn last
week spooked the markets."
Kit Juckes, global strategist at Société Générale, said
Tuesday's gains should be viewed as a temporary effect rather than
a change in market direction.
"I wouldn't place too much faith that the current mood
improvement is going to last all that long. Still, it can certainly
last for a day or two," he said.
Trade tensions have also hit the yuan, driving the currency
below 6.9 to the U.S. dollar in the offshore market, its weakest
level since late December.
The yield on 10-year U.S. Treasurys on Tuesday edged up to
2.413%, from 2.405% on Monday. Yields move inversely to prices.
German 10-year government bonds were still in negative territory at
-0.063%.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was flat.
In commodities, global benchmark Brent crude oil was up 0.2% on
Tuesday morning at $70.35 a barrel. Gold was down 0.2% at $1,298.80
an ounce.
(END) Dow Jones Newswires
May 14, 2019 06:04 ET (10:04 GMT)
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