Jump to content

US and China agree tariff ceasefire; Markets soar - EMEA Brief 3 Dec



  • The US and China have agreed a temporary ceasefire on additional tariffs on each others goods at the G-20 summit in Argentina to allow for trade talks to continue in the new year.
  • Dow futures soared more than 450 points as investors have reacted positively to the US-China news. Nasdaq futures also rose around 2.7%, followed by S&P 500 futures which jumped 1.7%.
  • The dollar depreciated on Monday as investors looked to take up positions in riskier assets, such as the Australian dollar which rallied 0.75% and the New Zealand dollar which rose 0.5%. The dollar index, which measures the value of the dollar versus six major currencies, traded down 0.36%.
  • European markets are expected to open higher this morning, again as a result of the announcement to postpone tariff escalation. The FTSE 100 is currently trading at  7,087, 107 points higher, the DAX 208 points above it's previous close, whilst the CAC is set to open up 83 points.
  • Asian equity markets also traded higher, the Shenzen composite rose 3.5% followed by the Shanghai composite which increased by 2.9%. The increases came following a data release from the Caixin Manufacturing Purchasing Managers' Index which indicated factory activity increased in China compared to last month.
  • Oil prices surged on Monday due to the US-China trade war truce, WTI crude futures were up to $53.63 a barrel, up 5.4%, whilst Brent crude futures were up 4.8%. 
  • Qatar's Energy Minister has announced that the country will leave OPEC on the 1st of January 2019, alluding to a "technical and strategic" change to develop and increase natural gas production.

UK, US and Europe: The European markets are set to rally after a ceasefire in the trade war between the US and China, after Trump and Xi reached an agreement over dinner in Buenos Aires on Saturday. The deal should see both China and the US hold off on additional tariffs on each other's goods for the next 90 days, whilst negotiations continue in a bid to reach a long-term agreement. Helen Qiao, China and Asia economist with Bank of Amarica Merrill Lynch, explained that "In contrast to the fear — especially in Asia —that the hawks in US administration would make impossible demands, evidence of President Trump working towards a trade deal with China has emerged"

With the announcement of a 90-day truce in the US-China trade war, how will this impact commodities? We have seen a surge in the price of oil ahead of the much anticipated OPEC meeting, but what impact will it have on base metals? Join our #IGCommodityChat on Thursday 6 December at 1pm (UK time) to discuss how trade wars are affecting base metals with Author and Economist Daniel Lacalle and John Meyer, partner and analyst at SP Angel. Get involved in the debate by tweeting your questions to @IGTV or by commenting in the section below.

Economic calendar - key events and forecast (times in GMT)


Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Netflix is under scrutiny by HMRC as the British operation declared sales of £23.9m, way below what the Times estimates the business generates. 
  • Convenience store chain McColl's has issued a profit warning today, as the company highlights the collapse of supplier Palmer & Harvey as a "significant supply chain disruption".
  • Stobart Group has announced that dividends will be cut for the fourth quarter to 1.5 pence. The firm said in a statement "The board believes it is prudent financial discipline to use proceeds from further disposals in the medium term primarily to invest in value-creating opportunities based on sustainable operating cash generation and to maintain a strong balance sheet".

IGTV featured video

Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary


Recommended Comments

There are no comments to display.

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...