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Wednesday, 12 December 2018

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Stocks cheered by Trump trade talk; sterling claws off lows


LONDON (Reuters) - Stock markets rallied on Wednesday as U.S. President Donald Trump sounded upbeat about a trade deal with China, while sterling rose off 20 month lows as Prime Minister Theresa May vowed to fight a challenge to her leadership.

In an interview with Reuters, Trump said talks were taking place with Beijing by phone and he would not raise tariffs on Chinese imports until he was sure about a deal.

Trump also said he would intervene in the Justice Department’s case against a top executive at China’s Huawei Technologies if it would serve national security interests or help close a trade deal.

A Canadian court on Tuesday granted bail to the executive in a move that could help placate Chinese officials angered by her arrest.

The news was enough to prompt a bounce after days of struggle and MSCI’s broadest index of world stocks advanced nearly 0.5 percent.

Japan’s Nikkei had led the way in Asia with a jump of 2 percent, while Shanghai blue chips trailed with just 0.2 percent.

London, Frankfurt and Paris then gained between 0.4 and 0.8 percent to push Europe higher and E-Mini futures for the S&P 500 added 0.5 percent.


“We are seeing risk sentiment stabilizing a bit,” said Societe Generale strategist Alvin Tan.

“Firstly we had news that China was considering reducing tariffs on us car, then the Huawei CFO was released on bail and then Trump said could he intervene in the case if it helped secure a trade deal.”

Having been repeatedly disappointed before, analysts were still being careful to not get too optimistic about prospects of a trade agreement.

ING said the Huawei case made it increasingly obvious that the China-US trade war is about the exchange of technology, and there were also reports the United States would release evidence this week detailing Chinese hacking and economic espionage.

“Even if this (auto) step is taken it just removes what was a retaliatory measure to begin with,” noted ANZ economist David Plank. “Whatever the case, market price action is somewhat of a chop-fest, right now, as it swings around on each new headline.”

Markets had also been jolted when Trump threatened to shut down the government over funding for a wall he has promised to build on the southern border with Mexico.


A VERY BRITISH COUP
The pound had fallen to 20-month lows overnight after lawmakers in May’s Conservative party gathered enough support to trigger a no-confidence vote in her leadership.

But it stabilized as some investors bet that May would win Wednesday’s vote and in the process isolate opponents in her party who want a clean, sudden break from the EU.

Neverthless, uncertainty over the secret ballot capped gains, keeping the pound only just above $1.25, having shed 1.9 percent in the previous two sessions to a trough of $1.2483.

The euro softened slightly 90.56 pence, but was flat on the dollar at $1.1324. The dollar was still being viewed as the best of a bad bunch and stayed at 97.411 on a basket of currencies.

“The market is concerned that May could be replaced by a Brexit-supporter, increasing the chance of a no-deal scenario,” said Rodrigo Catril, a senior FX strategist at NAB.

Investors were also looking ahead to the U.S consumer price report later on Wednesday where an expected slowdown in headline inflation would only reinforce speculation of fewer rate hikes from the Federal Reserve.

While market still expect the Fed will tighten at its policy meeting next week, Trump said the central bank would be “foolish” to do so.

Wagers on a more restrained Fed helped gold stay near a five-month peak around $1,244.17 an ounce.

Stock selloff snowballs on fresh fears for world growth
Oil bounced after industry data showed a surprisingly large draw on stockpiles and amid talk a recent OPEC-led supply cut could support prices in 2019.

Brent futures added another 65 cents to $60.85, while U.S. crude rose 60 cents to $52.25 a barrel.

Reference: Marc Jones

Eddie Izzard- Death Star Canteen

FTSE rises on hopes of trade war truce as Brexit turmoil worsens


LONDON (Reuters) - UK blue-chip shares rose on Wednesday led by mining and oil stocks as investors welcomed conciliatory signs in the protracted trade row between Washington and Beijing, offsetting worries over deepening political chaos at home.

The FTSE 100 .FTSE was up 1.1 percent at 1049 GMT, as the stronger dollar helped lift companies with international earnings. HSBC, which makes a big chunk of its revenue abroad, was the biggest contributor to the market's gains, followed by Shell, which was boosted by higher oil prices.

The more domestically focused midcap index .FTMC was up 0.7 percent after Prime Minister Theresa May said she would fight a no confidence vote against her later in the day, as the saga over Britain's divorce from the European Union continues.

The pound was up 0.3 percent, suggesting traders reckon she will win the vote which could quash hard Brexiteers for good.


The Irish exchange Dublin .ISEQ, which has fallen 22 percent so far this year, was the only major European bourse in the red by midmorning. Ireland's economy is seen as highly sensitive to any negative Brexit outcome.

FTSE investors focused instead positive signs from the protracted U.S.-China trade war, easing worries about the damage to global economic growth.

“The gains are reflecting lots of other news out there. Investors have attached to the trade story today,” said Ben Gutteridge, head of fund research at Brewin Dolphin.

“It’s hard to see a deal that would satisfy the Trump administration. The trade story is so loose, it’s surprising it’s such a powerful rally.”

U.S. President Donald Trump said he would intervene in the Justice Department’s case against a top executive at China’s Huawei Technologies if it would serve national security interests or help close a trade deal with China.

Mining stocks, BHP Group and Rio Tinto, were among the top gainers, in line with higher base metals prices, following Trump’s comments, while the dollar held near a one-month peak against its peers.

Tobacco stocks British American Tobacco was up more than 2 percent after the world’s No. 2 tobacco company stood by its full-year forecast. Peer Imperial Brands (IMB.L) gained 2.5 percent.

Among the losers, Wood Group fell 6.2 percent to the bottom of the FTSE and its lowest since May as its cautious outlook on contracts as its oil-producing clients struggle with volatile prices outweighed an upbeat earnings outlook.

Housebuilders Persimmon, Taylor Wimpey, Berkeley Group and Barratt Development fell between 0.9 and 1.4 percent as investors shunned stocks seen as some of the most sensitive to a hard Brexit.

Wall Street ends choppy day higher
Retailer Next was down 1.9 percent to its lowest since January, as disappointing news from clothes retailer Superdry and phone and electronics chain Dixons Carphone further dented confidence in the battered retail sector.

Among the midcaps, Superdry plunged 32 percent and Dixons sank 8 percent to their weakest in more than five years, while Metro Bank lost 5.7 percent after a Citi downgrade.

Indivior fell 4.5 percent as buying ran out of steam after a positive U.S. court ruling on its best-selling opioid addiction drug.

Reporting by Josephine Mason and Helen Reid

Tech stocks lead Wall Street higher on China-U.S. trade talk progress


(Reuters) - U.S. stocks jumped on Tuesday, rising for the second day in a row, led by technology companies on signs of progress between China and the United States to resolve their trade dispute, which has roiled the markets for months.

The roughly 1 percent gains, also boosted by data that showed U.S. producer prices unexpectedly rose last month, helped the benchmark S&P 500 and the blue-chip Dow Jones Industrial Average sharply cut their losses for the year.

U.S. and Chinese officials discussed a road map for the next stage of trade talks, while President Donald Trump said negotiations were “very productive” and an “important announcement” was imminent.

Earlier, Bloomberg reported China is moving to cut import tariffs on American-made cars to 15 percent from 40 percent, sending shares of General Motors Co and Ford Motor Co up more than 2 percent.

“This is a garden variety oversold bounce driven by headlines on China tariffs,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.

“When you bounce from deeply oversold condition, the stuff that led down is the stuff that leads higher.”

Technology stocks, which helped power a dramatic reversal in the market on Monday, rose 1.23 percent and provided the biggest boost.

The trade-sensitive chipmakers index jumped 2.12 percent. The industrial sector gained 1.23 percent, led by gains in Caterpillar Inc and Boeing Co.

The S&P snapped a three-day losing streak on Monday as the benchmark index bounced off an eight-month low it hit on concerns over global growth.

Data showed U.S. producer prices unexpectedly rose in November as increases in the costs for services offset a sharp decline for energy products, but the overall momentum in wholesale inflation appears to be slowing.

The report comes as investors also grapple with concerns over interest rates and is ahead of the more crucial consumer price data on Wednesday.

The S&P financials index was up 1.2 percent, while rate-sensitive S&P bank stocks rose 1.20 percent.

At 9:59 a.m. ET, the Dow was up 241.77 points, or 0.99 percent, at 24,665.03. The S&P was up 29.32 points, or 1.11 percent, at 2,667.04 and the Nasdaq Composite was up 88.50 points, or 1.26 percent, at 7,109.02.

The defensive utilities and real estate sectors eked out the smallest gains.

Wall Street ends choppy day higher
Alphabet Inc was up 1 percent ahead of Google Chief Executive Officer Sundar Pichai’s congressional hearing later in the day.

Pfizer Inc was down 1 percent after a JP Morgan downgrade. The drugmaker and Apple Inc, off 0.6 percent, were the only two Dow stocks trading lower.

Advancing issues outnumbered decliners by a 6.09-to-1 ratio on the NYSE and a 3.66-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and no new lows, while the Nasdaq recorded 16 new highs and 48 new lows.

Reference: Medha Singh

Tuesday, 11 December 2018

Sterling rises off 20-month lows in volatile trade


LONDON (Reuters) - Sterling recovered some ground on Tuesday from the 20-month lows it hit after British Prime Minister Theresa May called off her Brexit vote, as dollar weakness encouraged some traders to buy the pound.

May’s decision on Monday initially sent the pound tumbling 2-1/2 cents towards $1.25, its lowest level since April 2017, before it recouped some losses - though the moves were exaggerated in thin trade.

“Sterling has been struggling to equilibrate between the heightened probability of either no deal or no Brexit with the odds of both increasing on Monday,” said Edward Park, deputy chief investment officer at Brooks Macdonald, a UK investment manager.

The pound was trading at $1.2630, up 0.6 percent on the day after plunging 1.5 percent on Monday. There was no immediate reaction to the release of stronger than expected UK jobs data as traders said they were firmly glued to Brexit developments.


Euro/sterling was broadly flat at 90.22 pence as May made the rounds of European leaders on Tuesday, seeking support for changes to her Brexit deal in a last ditch bid to save it.

“It is impossible to say whether this is as bad as it gets for sterling as that depends on what May gets back from Brussels and the odds of that getting through Parliament,” said John Marley, a senior currency consultant at FX risk management specialist, SmartCurrencyBusiness.

Buying sterling volatility remained the favorite trade for investors with one-week volatility hovering around 15 percent, its highest levels so far this year and nearly doubling from August lows.

In a sign of how big Monday’s selloff was in the currency markets, a trade-weighted value of the pound against the rivals plunged 1.5 percent, one of its biggest daily losses since the Brexit referendum vote in June 2016.

Reporting by Saikat Chatterjee

China, U.S. discuss road map for next stage of trade talks


BEIJING (Reuters) - China and the United States discussed a road map for the next stage of their trade talks on Tuesday, during a telephone call between Vice Premier Liu He and U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.

U.S. President Donald Trump and Chinese President Xi Jinping agreed at a Dec. 1 meeting in Argentina to a truce that delayed the planned Jan. 1 U.S. increase of tariffs to 25 percent from 10 percent on $200 billion worth of Chinese goods.

Lighthizer said on Sunday that unless U.S.-China trade talks wrapped up successfully by March 1, new tariffs would be imposed, clarifying there was a “hard deadline” after a week of seeming confusion among Trump and his advisers.


China’s commerce ministry said in a statement Liu had spoken to Mnuchin and Lighthizer on Tuesday morning, Beijing time, on a pre-arranged telephone call.

“Both sides exchanged views on putting into effect the consensus reached by the two countries’ leaders at their meeting, and pushing forward the timetable and roadmap for the next stage of economic and trade consultations work,” the ministry said.

It did not elaborate.


A U.S. Treasury spokesman confirmed that the call with Liu took place, but offered no further details. The U.S. Trade Representative’s office did not immediately respond to a query about the call.

The Wall Street Journal, citing people familiar with the issue, said Liu planned to go to Washington after the new year.

The Harvard-educated Liu, Xi’s top economic adviser, is leading the talks on the Chinese side.

In comments reported separately by China’s Foreign Ministry, the government’s top diplomat, State Councillor Wang Yi, said if China and the United States cooperated, it would benefit the whole world.

Trump defends hush money as Cohen faces prison
“If China and the United States are antagonistic, then there are no winners, and it will hurt the whole world,” Wang told a forum.

The United States should look at China’s development in a more positive light, and constantly look to “expand the space and prospects for mutual benefit”, he said.

Global markets are jittery about a growing clash between the world’s two largest economic powers over China’s huge trade surplus with the United States and Washington’s claims that Beijing is stealing intellectual property and technology.

The arrest of a top executive at China’s Huawei Technologies Co Ltd has also roiled global markets amid fears that it could further inflame the China-U.S. trade row.

Reporting by Ben Blanchard and Lusha Zhang