Global stocks enjoy a strong start of the month with main indexes around the global trading strongly into the green. The positive mood of the investors came after the agreed trade truce between US President Donald Trump and his Chinese counterpart, Xi Jinping, at the G20 summit in Japan. The positive news gave impetus to Asian stock exchanges and the positivism extended to European equities and Wall Street futures.
However, according to analysts, it is unlikely to reach a final trade agreement.
According to the analysts of Citi bank, the current trade truce will continue until the end of the year, and next year there will be a deal between the two sides.
Concerning Huawei, Donald Trump explained that the issue would be resolved only at the conclusion of the negotiations.
Meanwhile, economic data released Monday shows that the business activity of Chinese factories is shrinking unexpectedly. The Caixin/Markit Purchasing Managers’ Index (PMI) for June fell to 49.9 points with a consensus forecast of 50 points and reported 50.2 points a month earlier.
Asian markets recap
Most stock exchanges in the Asia-Pacific ended Monday trading session with gains after US President Donald Trump and his Chinese counterpart, Xi Jinping, have agreed on a new ceasefire in their trade war by removing the immediate threat to the world economy, although the lasting peace is still away.
In China, the mainland index Shanghai Composite added 1.88% to its value, while the Shenzhen Component is up by 3.23%. The CSI 300, which tracks the performance of the largest companies in the country, grew by 2.47%. At the same time, the Hong Kong’s index Hang Seng declined by 0.28% amid the protests in the city on the anniversary of China’s return in Hong Kong.
In Japan, the blue-chip index on the Tokyo Stock Exchange, Nikkei 225, added 1.96% to a two-year high of 21,729.97 points. The broader Topix indicator advances by 1.8%. The best performers of the session were Taiyo Yuden (+14.71%), Dainippon Screen Mfg (+8.62%) and TDK Corp (+6.95%), while on the flipside were Rakuten Inc (-2.11%), Chiyoda Corp (-2.08%) and Ricoh Co (-0.28%). The shares of Samsung Electronics closed down by 0.9%.
In South Korea, the local index Kospi dropped out of its earlier gain and ended the trading session with a decline of 0.04%. Some South Korean firms producing materials used in semiconductor manufacturing process closed firmer.
In Australia, the S&P/ASX 200 index finished with a modest growth of 0.04%.
European markets mid-session recap
European stock markets rose sharply in initial trading today, mirroring strong gains in Asia, largely thanks to optimism over future US-China trade talks. The pan-European Stoxx 600 gained 0.93% to 388.46 points.
The German index DAX 30 begins the second half of the year with a strong start, entering the scattered territory. The indicator gained 1.26% to 12,554.87 points at 09:45 GMT. The stocks of the chip maker Infineon Technologies rose by more than 4% after the Sino-American trade truce during the weekend. German real estate companies also increase their value amid the information that lawyers from the German Parliament believe the planned ban on rising rents in Berlin is illegal. The index DAX 30 has returned to the bullish territory seven months after the index was covered by bearish sentiment, as last year it was filled with challenges for public companies because of fears for the trade war, slowing down the economy and lowering expectations for a large part of the business.
The French index CAC 40 is up by 0.81% to 5,583.81 points at mid-session. Following the positive development in US-China trade talks, the stocks of carmakers gainer strongly with Renault adding 0.8% and Peugeot rising by 2.1%. The shares of the aircraft manufacturer Airbus are up by 0.75%. Financial stocks were also into the green territory with BNP Paribas and Societe Generale gaining 1.8% and 1.5%, respectively.
The British blue-chip index FTSE 100 is up by 1.11% to 7,507.70 points to over 2-month high. Investors piled into equities, especially those of banks with a big presence in Asia such as HSBC and Prudential. Shares of miners, sensitive to news surrounding top metals consumer China, also boosted the main index. Oil majors Shell and BP advanced as crude prices surged after top producers Saudi Arabia, Russia and Iraq backed a plan to extend supply cuts for another six to nine months. In one of the few news-driven moves, media services firm Future Plc climbed nearly 12% on the mid-cap index after it forecast full-year results to be ahead of expectations due to growth in media revenue.
Wall Street pre-session recap
Wall Street stock futures surged on Monday morning after the US and China agreed to hold off on slapping additional tariffs on their products in an effort to resume trade talks.
As of 6 a.m. ET Monday, Dow Jones Industrial Average futures indicated a gain of more than 270 points at Monday’s open. S&P 500 and Nasdaq 100 futures also pointed to gains.
That surge came after stocks recovered in June from a torrid May performance. The Dow soared 7.2% in June, its biggest gain for that month since 1938. The S&P 500, meanwhile, jumped 7.9% for the month, marking its best June performance since 1955.
In economic news, ISM manufacturing and construction spending data are expected at 10 a.m. ET.