World stocks climbed to their highest in six weeks on Thursday as the European Central Bank prepared to offer new stimulus measures and the United States and China made mutual concessions in their trade dispute, improving demand for riskier bets.
U.S. president Donald Trump delayed an increase in tariffs on Chinese goods by two weeks, after China exempted some U.S. drugs and other goods from tariffs. The two moves buoyed stock markets from Asia to Europe and put pressure on safe assets like the Japanese yen.
MSCI’s world equity index, which tracks shares in 47 countries, rose 0.1% to its highest since Aug. 1. It was on course for its seventh straight day of gains, its best winning streak in since early June.
Europe’s Euro STOXX 600 climbed to its highest in nearly seven weeks, then gave up the gains. Paris and London markets also relinquished early gains, though Frankfurt held onto a 0.2% advance. Wall Street futures gauges were up 0.1%.
Some analysts said investors were getting too eager for good news on the U.S.-China trade war. The prospects of a quick resolution were still remote, they warned.
“I don’t think we’re heading for a deal soon,” said Neil Wilson, chief market analyst at Markets.com. “The market is just buying on any kind of positive news – it seems hungry for anything. It’s setting itself up for a bit of disappointment.”
The ECB’s move, due at 1145 GMT, also carries a risk of overly optimistic market expectations, investors said.
Major central banks worldwide are loosening monetary policy, inflation expectations are sliding and the powerhouse German economy is at risk of recession. Consequently, ECB President Mario Draghi has all but promised more support.
But the central bank’s exact moves are far from certain, and any decision that underwhelms markets could push up borrowing costs.
Among the likely measures are a cut in the ECB’s record-low minus 0.4% deposit rate, a multi-tier deposit rate, and new guidance on rates that would tie any move to certain inflation conditions.
A new round of bond buying, the bank’s most potent weapon, is also an option – but policymakers from Germany to France are sceptical about that move.
Frontpage November 30, 2017