Global stocks rose and oil prices extended their rally after Donald Trump opened the door to an extension of the US-China trade truce beyond the March 1 deadline.
The US president said he could allow more time for negotiations with Beijing if the sides were close to a “real deal”. That statement came as trade talks between the world’s two biggest economies continued in Beijing this week.
China’s CSI 300 added 2 per cent, building on the previous day’s gain of 1 per cent, while in Hong Kong the Hang Seng was up 1.2 per cent.
London’s FTSE 100 rose 0.4 per cent, as did Frankfurt’s Xetra Dax 30. US futures pointed to a rise of 0.1 per cent for the S&P 500 after it rose 1.2 per cent overnight.
“A sustained bullish outcome from trade discussions may still need a more concrete resolution, [but] the softening of stance does suggest . . . willingness to reach a deal [and] progress being made in talks so far,” said Johanna Chua, a strategist at Citi.
The gains for Brent crude oil — which passed 2 per cent for the last two sessions — took Brent to just under $63.
That helped the energy sector. The Stoxx index tracking it rose a further 0.5 per cent, building on a 0.6 per cent rise over the previous session after Khalid al Falih, Saudi Arabia’s energy minister, told the Financial Times the kingdom would deepen production cuts.
Tokyo’s Topix rose 1.1 per cent to its highest level in two months.
Forex
The New Zealand dollar jumped as much as 1.7 per cent after the country’s central bank said it expected to leave interest rates at their current levels for the rest of 2019 and all of 2020 — in contrast to increasingly dovish leanings at other global central banks.
The Reserve Bank of New Zealand held its official cash rate at 1.75 per cent as expected, and said in its monetary policy statement that “we expect to keep the OCR at this level through 2019 and 2020”.
However, it added that the “direction of our next [rates] move could be up or down”. The central bank’s economic projections tipped the cash rate to average 1.8 per cent through 2021, before climbing to 2.2 per cent in 2022.
The kiwi was up 1.7 per cent against its US counterpart at $0.6848.
Attention was turning towards inflation data for the US for January, due at 1.30pm London time, with the core consumer price index expected to rise 0.1 per cent month on month. In the meantime, the dollar index was steady at 96.725, leaving it around its highest level in two months, which came just above 97 points.
Sterling held steady at $1.2884 as year-on-year consumer price index (CPI) inflation fell below the Bank of England’s 2 per cent target for the first time since early 2017. CPI for January came in at 1.9 per cent. The UK’s fraught Brexit politics remained the main driver for sentiment toward the pound.
“A soft January does not a deflationary summer make. It was a weak month for CPI but January sales and last year’s oil price are masking the inflationary demon.”
Guy Foster, Head of Research at Brewin Dolphin
The euro was flat at $1.1326.
Commodities
Oil prices extended a rally that kicked off during the previous session after signs Opec’s production cuts were taking hold and comments on supply from Saudi Arabia’s energy minister.
Brent crude, the international benchmark, rose 1 per cent in Asian trading to $63.05 a barrel, while US marker West Texas Intermediate climbed the same extent to $53.63.
