Global shares up amid jitters over US stimulus, China trade agreement

BEIJING (AP) — Global markets and United States (US) stock futures rose yesterday amid investor concern about US stimulus spending and a trade agreement with Beijing.

London and Frankfurt opened higher, while Shanghai, Hong Kong and Seoul rose. Tokyo declined.

Gold rose to a new record after a deadly explosion in Beirut.

Investors are watching the stalemate among US legislators over employment benefits for millions of Americans thrown out of work by the coronavirus pandemic and spending to shore up anemic economic growth.

At the same time, news reports from Washington said Chinese and American trade envoys will meet this month to review their “Phase 1” agreement aimed at ending a tariff war. That follows US President Donald Trump’s threat to discard the agreement over Beijing’s handling of the coronavirus pandemic.

Traders see that as a sign of “commitment to ensuring the agreement holds” despite escalating US-Chinese tension, Stephen Innes of AxiTrader said in a report.

A woman walks past a bank’s electronic board showing the Hong Kong share index at Hong Kong Stock Exchange. PHOTO: AP

In early trading, the FTSE 100 in London gained one per cent to 6,093.20 and Frankfurt’s DAX advanced 0.8 per cent to 12,708.61. The CAC 40 in France added 0.8 per cent to 4,930.04.

On Wall Street, the future for the benchmark S&P 500 index was up 0.6 per cent and that for the Dow Jones Industrial Average was 0.5 per cent higher.

On Tuesday, S&P 500 index gained 0.4 per cent as a rally eased. The index is within 2.4 per cent of its February record high. The Dow climbed 0.6 per cent and the Nasdaq composite added 0.4 per cent to a record.

In Asia, the Shanghai Composite Index gained 0.2 per cent to 3,377.56 while the Nikkei 225 in Tokyo lost 0.3 per cent to 22,514.85. The Hang Seng in Hong Kong rose 0.6 per cent to 25,102.54.

The S&P-ASX 200 in Sydney fell 0.6 per cent to 6,001.30 while Seoul’s Kospi gained 1.4 per cent to 2,311.86.

India’s Sensex was little-changed at 37,691.69. New Zealand retreated while Singapore, Bangkok and Jakarta gained.

Also yesterday, gold rose USD29.20 to USD2,050.90.

Investors have been buying gold and silver, usually seen as a store of value if stock prices decline. Forecasters see that as an indicator of rising unease about the global economic outlook.

The explosion in Beirut killed at least 70 people, injured more than 3,000 and flattened much of the Lebanese capital’s port. The cause of the most destructive blast in the country’s history was unclear.

Global markets recovered most of this year’s losses as investors look ahead to the possible development of a coronavirus vaccine. Forecasters warned the rebound might be too big and fast to be sustained by uncertain economic activity as infections rise in the US and some other countries.

Legislators in Washington are at odds over a relief package including a replacement for USD600 weekly unemployment benefits that expired last week.

The number of people filing for unemployment is rising after a resurgence of infections pushed some states to reimpose controls on business. Economists expect a report tomorrow to show US employers added 1.8 million jobs last month, which would be welcome growth but also a slowdown from June.

For now, investors are relying on the Federal Reserve, which said last week it would keep interest rates near zero. At the same time, Fed Chairman Jerome Powell said Congress needs to take action.

“Markets are betting on the Fed picking up the slack more permanently even from temporary fiscal stimulus lapses and convulsions,” Hayaki Narita of Mizuho Bank said in a report.