China deal lifts US stocks into record territory

London: Wall Street stocks pushed into record territory on Monday as investors absorbed a new US-China trade deal and Beijing released some upbeat economic data.

US and Chinese officials on Friday announced a partial trade deal, with Washington cancelling and reducing tariffs in exchange for Chinese pledges to increase purchases of US exports and reform its trade practices.

All three main US stock indexes, the benchmark Dow Jones Industrial Average, the broader S&P 500 and tech-heavy Nasdaq all moved into record territory during morning trading.

The Dow was up 0.6 percent at 1630 GMT.

Market watchers said investors may be largely discounting the chances the process could take a turn for the worse.

“A deal must still be signed, including an agreement over a translated text, but the market is evidently optimistic that the deal will get finalised in early January as planned,” analysts at wrote.

“For good measure, data out of China showed better-than-expected industrial production and retail sales growth for November.”

European stock markets also moved higher Monday, led by London’s FTSE 100 which benefitted from continued post-election optimism and a dip in the value of the pound.

The pound surged Friday after Prime Minister Boris Johnson’s crushing election win, striking an 18-month high against the dollar and a more than three-year peak against the euro.

The currency pulled back on Monday on “UK services and manufacturing PMI surveys slumping sharply”, said Joshua Mahony, senior market analyst at IG trading group.

“However, while the contraction in both sectors is far from ideal, this is likely to be a short-term drop as businesses held off until the election result became clear.”

The pound’s dip on Monday helped to boost London’s benchmark FTSE 100 index that features a number of multinationals earning in dollars, which closed the day with a 2.3 percent jump in value.

In the eurozone, Frankfurt’s DAX 30 index climbed 0.9 percent to close just shy of a record high. And the Paris CAC 40 won 1.2 percent, briefly breaching the 6,000 points level for the first time in 12 years.

The eurozone’s economy meanwhile remained at a near standstill in December, extending the worst quarterly performance since 2013, according to a closely-watched survey compiled by IHS Markit research group.

While the removal of uncertainty surrounding Brexit allowed markets to breathe a huge sigh of relief, analysts urged caution with the saga having some way to run.

“This is just the end of the beginning,” noted Quentin Fitzsimmons at T. Rowe Price.

“The real work of negotiating the UK’s future trading relationship with the EU lies ahead and that has the potential to become very complicated.”

Key figures around 1630 GMT

London – FTSE 100: UP 2.3 percent at 7,5519.05 points (close)

Frankfurt – DAX 30: UP 0.9 percent at 13,407.66 (close)

Paris – CAC 40: UP 1.2 percent at 5,991.66 (close)

EURO STOXX 50: UP 1.1 percent at 3,773.69

New York – Dow: UP 0.6 percent at 28,308.79

Tokyo – Nikkei 225: DOWN 0.3 percent at 23,952.35 (close)

Hong Kong – Hang Seng: DOWN 0.7 percent at 27,508.09 (close)

Shanghai – Composite: UP 0.6 percent at 2,984.39 (close)

Pound/dollar: DOWN at $1.3327 from $1.3331 at 2200 GMT on Friday

Euro/pound: UP at 83.60 pence from 83.42 pence

Euro/dollar: UP at $1.140 from $1.1121

Dollar/yen: UP at 109.66 yen from 109.38 yen

Brent North Sea crude: UP 0.4 percent at $65.51 per barrel

West Texas Intermediate: UP 0.2 percent at $60.20 per barrel

Source from: The Peninsula