London: European and US stock markets rose on Wednesday as investors, growing de-sensitised to trade war talk, cautiously put money back into equities, traders said.
Surging oil prices helped energy firms listed on key markets, while the dollar rose, boosted by players looking for a temporary safe haven currency.
Energy-fuelled equity strength was “offsetting mixed messages coming out of the White House” said Artjom Hatsaturjants, an analyst at Accendo Markets.
New threats of restrictions on Chinese investment were sliding “on and off the table, depending on who you ask”.
Reports have suggested that the United States may not crack down on Chinese investment as hard as earlier assumed, analysts said.
World equity markets had slumped Monday as trade war fears took a heavy toll on valuations, while attempts to claw back lost ground lacked conviction Tuesday.
But by mid-afternoon Wednesday, Europe’s key markets were all around one percent higher, while Wall Street also rose slightly at the opening bell.
– Trump’s ‘funny way’ –
On oil markets, both main crude contracts extended strong gains triggered by the State Department warning US allies that they would be hit with sanctions if they did not halt Iran oil purchases by November 4.
Analysts had a field day pointing out US President Donald Trump’s apparent inconsistencies over oil.
“For someone who has claimed to be unhappy about rising oil prices, the Trump administration sure has a funny way of showing it, or taking steps to achieve it,” quipped Michael Hewson at CMC Markets.
When Trump blamed OPEC for higher crude prices he was “rather overlooking the fact that if you take over 3.8m barrels of supply out of global production that tends to push prices up”.
The commodity has enjoyed a healthy run since the weekend, when OPEC and Russia agreed to raise output by only a small amount.
Trade tensions continued to simmer in the background, with investors on edge awaiting the next developments.
Stephen Innes, head of Asia-Pacific trading at Oanda, said Trump’s attack on Harley-Davidson indicated he is not ready to back down on his hardline protectionist “America First” agenda.
Trump on Tuesday hit out at the motorbike maker after it said it was planning to shift some manufacturing overseas because of European Union tariffs put in place as retaliation for US duties.
– American as apple pie –
In a commentary, Innes said: “The only thing I can think of that is more iconic Americana than apple pie is Harley-Davidson.
“So, after the president’s recent Twitter tirade directed at the iconic motorcycle manufacturer, it cements the view that, friend or foe, no one is safe from the wrath of the US administration’s America First trade policy.”
He added that, while the US economy remains in rude health, which should support equities, “investors are caught between a hammer and anvil on escalating trade wars”.
On currency markets, the dollar rose, reversing an earlier bout of weakness.
“The US dollar remains among the strongest of currencies out there,” said Fawad Razaqzada at Forex.com.
“Not only is it finding support from safe haven flows amid the current stock market weakness, but it is also in demand due to the growing disparity between monetary policies in the US against other major economies,” he said.
Among individual stocks, Deutsche Bank shares fell to their lowest level ever in Frankfurt as the financial sector suffered and analysts were gearing up for a weak performance from the German giant’s US subsidiaries in US stress tests run by the Federal Reserve.
“Everyone in the market is expecting them to fail,” said Markus Riesselmann, an analyst at Independent Research, adding that Deutsche Bank “must deliver” stronger results if it wants its share price to recover.
– Key figures around 1335 GMT –
London – FTSE 100: UP 1.0 percent at 7,609.75 points
Frankfurt – DAX 30: UP 1.0 percent at 12,364.19
Paris – CAC 40: UP 1.2 percent at 5,346.35
EURO STOXX 50: UP 1.1 percent at 3,404.77
New York – Dow Jones: UP 0.3 percent at 24,347.18
Tokyo – Nikkei 225: DOWN 0.3 percent at 22,271.77 (close)
Hong Kong – Hang Seng: DOWN 1.8 percent at 28,356.26 (close)
Shanghai – Composite: DOWN 1.1 percent at 2,813.18 (close)
Euro/dollar: DOWN at $1.1607 from $1.1648 at 2100 GMT
Pound/dollar: DOWN at $1.3162 from $1.3200
Dollar/yen: UP at 110.38 yen from 110.08 yen
Oil – Brent Crude: UP 77 cents at $76.91 per barrel
Oil – West Texas Intermediate: UP 93 cents at $71.46