US-Chinese trade hopes to expand the rise in shares; central banks support

LONDON (Reuters) – Hope for progress in trade talks between the US and China hit a record four months on Wednesday, as the accommodative backdrop of major central banks also helped push markets towards black.

US President Donald Trump said negotiations with China were proceeding well and had hinted that he was willing to extend the deadline to complete them beyond March 1st.

Until now, it was assumed that US tariffs on Chinese imports worth $ 200 billion would increase from 10% to 25% if no trade agreement was concluded. here there.

Asian stocks rose sharply following Trump's comments, as did European stock indexes, which pushed the MSCI World Stock Index, which tracks shares in 47 countries, to its highest level in four months.

Deutsche Bank Chief Strategist Jim Reid said the news was encouraging, despite signs that further progress was needed.

"The general impression is that it's a step forward, three steps back at the moment. So a positive dynamic but still fragile, "he said in a note.

While hopes for a trade deal between the two largest economies in the world are seen as the main driver of global equities, the messages from the central bank of Denmark also play a role.

Fed Chairman in New York, John Williams, said on Tuesday that he was comfortable with the level of US interest rates and that he did not see the need for raise them unless economic growth or inflation is unexpectedly higher.

Investors are also expecting Wednesday's minutes of the Federal Reserve's January meeting, during which policymakers have actually signaled no further rate hike or any possible adjustment to the normalization of the Fed. its balance sheet.

In Europe, there is growing expectation that the European Central Bank will revive a program to provide cheap long-term loans to banks in order to revive a declining economy, while the Bank of Japan has announced that she was willing to relax more.

The broadest MSCI index, comprised of Asia Pacific equities outside Japan, advanced 1.1% to its highest level since October 2nd.

Hong Kong's Hang Seng reached an all-time high of 1.3 percent, while the Korean Kospi and Taiwan indexes returned to their lowest level in early October. Japan's Nikkei added 0.6% to its highest level in two months.

On the currency markets, the dollar has stabilized against a basket of major currencies, after suffering its biggest single day loss this month. He had also recorded big slips against the euro and the pound sterling.

The greenback edged up 0.2% against the yen after Japan recorded its largest annual decline in exports in January for more than two years, and according to recent dovish signals from the Bank of Japan .

Markets were also focused on news feeds on the Brexit front, with the British Pound retaining most of its gains after a 1% rise on Tuesday as British Prime Minister Theresa May traveled to Brussels to try to move the negotiations forward.

The yuan rose 0.6 percent against the dollar, its biggest gain for more than a month, after Bloomberg reported on Tuesday that the United States was seeking a promise from China that it would not be worth it. they would not devalue the currency in their currency. of a commercial agreement.

Oil prices hit the heights of 2019, supported by OPEC supply cuts and United States sanctions on Iran and Venezuela.

Futures contracts on Brent International were $ 66.30 a barrel after peaking at $ 66.83 a barrel earlier this week.