Stocks Climb as Trump Suggests a Trade Deal Is Near

Date : 12/12/2019 @ 3:25PM
Source : Dow Jones News
Stock : FTSE 100 Index (UKX)
Quote : 5415.5  0.0 (0.00%) @ 1:00AM
FTSE 100 share price Chart

Stocks Climb as Trump Suggests a Trade Deal Is Near

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By Caitlin Ostroff 

Stocks climbed Thursday after President Trump said on Twitter that the U.S. and China are nearing a trade deal.

Major indexes opened slightly lower but jumped after Mr. Trump said the U.S. is "very close to a big deal" with China on trade, adding "they want it, and so do we."

The Dow Jones Industrial Average added 161 points, or 0.6%, in early New York trading, while the S&P 500 climbed 0.6%, and the tech-heavy Nasdaq Composite Index rose 0.5%.

Markets had been in a holding pattern ahead of President Trump's decision on a fresh round of tariffs that are set to go into effect Sunday on roughly $156 billion of Chinese goods. The Wall Street Journal reported earlier this week that negotiators on both sides are working to delay the levies. The tariffs, which threaten to deepen China's economic problems and prompt retaliatory action, could also weigh on prices of cellphones, laptops and apparel for American consumers.

"People are just sort of trying to read the tea leaves of whether the relationship is improving," said Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management.

Elsewhere, investors are awaiting cues on the health of the European economy and the U.K.'s next steps on Brexit.

Earlier in the day, the European Central Bank under its new President Christine Lagarde left interest rates unchanged at minus 0.5%.

On Wednesday, the U.S. central bank's policy makers indicated that they believe interest rates are low enough to stimulate growth in the world's largest economy as they opted to leave monetary policy unchanged. The outlook is "a favorable one," Chairman Jerome Powell said. The Fed's recent market interventions to keep short-term rates stable are also working, he said.

On a day of weak trading, the U.K.'s FTSE 100 stood as an outlier, gaining 0.4% as investors awaited the outcome of the general election.

Politicians in both the major political parties are signaling an end to years of constrained fiscal policy as the country prepares to exit from the European Union, and the vote results will play a crucial role in determining the course of Brexit. While a parliamentary majority for the Conservative Party is seen as most likely, recent polls have shown that Prime Minister Boris Johnson's lead has narrowed.

The British currency, which has rallied against the dollar in the past two weeks to surpass $1.32, fell 0.5% Thursday, with 1 pound buying $1.3138. The yield on 10-year U.K. gilts fell to 0.735% on Thursday from 0.776% on Wednesday.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

 

(END) Dow Jones Newswires

December 12, 2019 10:10 ET (15:10 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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