LONDON MARKET CLOSE: Trump Says Trade Deal With China Within Reach

(Alliance News) - Stocks in London ended sharply higher on Thursday as investors cheered a positive statement from the US, indicating tariffs on Chinese goods set to come into effect on Sunday may be avoided.

US officials have offered to cancel December 15 tariffs and slash existing duties on about USD360 billion in Chinese goods in exchange for concessions from Beijing to ease the trade conflict between the two economic powers, the Wall Street Journal reported Thursday.

The newspaper, citing people briefed on the talks, reported US officials offered to cancel the 10% tariffs on USD160 billion in goods set to hit Sunday.

Washington offered cut existing tariffs by as much as half but is demanding that China buy a large amount of US farm goods and other products, better protect US technology and open the Chinese financial services sector, according to the report.

If China fails to comply, the tariffs would revert to the original level.

President Donald Trump said Thursday the sides are very close to a deal.

"Getting VERY close to a BIG DEAL with China. They want it, and so do we!" Trump tweeted.

The FTSE 100 index closed up 70.75 points, or 1.0% at 7,287.00. The FTSE 250 ended up 145.92 points, or 0.7%, at 20,793.03, and the AIM All-Share closed up 4.33 points, or 0.5%, at 899.33.

The Cboe UK 100 ended up 1.0% at 12,353.68, the Cboe UK 250 closed up 0.7% at 18,718.02 and the Cboe Small Companies ended 0.2% higher at 11,345.31.

In Paris the CAC 40 ended up 0.4%, while the DAX 30 in Frankfurt ended up 0.6%.

Stocks in New York hit fresh intraday all-time highs in early trade, with the DJIA up 1.0%, the S&P 500 index up 0.9% and the Nasdaq Composite up 0.8%.

"The Dow has surged into a fresh record high this afternoon, with a relatively calm day disrupted by Donald Trump's unpredictable tweeting once again. With the US apparently pledging to cancel Sunday's tariffs, and halve the current tariffs on Chinese imports, there is a feeling that this time Trump may be telling the truth. That optimism is also evident throughout trade related markets, with the likes of copper and iron ore on the rise, to the benefit of FTSE 100 miners Anglo American and Glencore," said IG Group's Josh Mahony.

On the London Stock Exchange, internationally-exposed miners ended among the blue chip risers amid the positive trade developments.

Anglo American closed up 3.2%, Glencore up 3.5%, Rio Tinto up 0.7% and BHP up 0.8%. Steelmaker Evraz closed up 4.6%.

Standard Chartered closed up 3.9% after the Asia-focused lender sold off its entire 45% interest in PT Bank Permata for about USD1.3 billion in cash to Thai commercial lender Bangkok Bank Public Co.

WPP closed up 2.5% after the ad agency agreed with Goldman Sachs International to repurchase up to GBP300 million of its shares.

The pound was quoted at USD1.3127 at the London equities close, down from USD1.3177 at the close Wednesday, as Britons headed to cast their votes in the general election.

The final poll by Ipsos MORI released Thursday for the London Evening Standard newspaper puts UK Prime Minister Boris Johnson's Conservative Party 11 points ahead of Labour.

The poll has the Tories on 44% and Labour on 33%, while the Liberal Democrats, according to the results, are on course to secure 12% of the vote. If the prediction comes to fruition, it would represent the largest share of the vote for the Tories at an election since Margaret Thatcher's first victory in 1979.

However, Ipsos MORI - which was still interviewing people on the day before polls opened - warned one in four voters declaring they could alter their voting intentions on polling day. The number of wavering voters is higher than two years ago when the 2017 general election produced a hung Parliament result, Ipsos MORI said.

"Looks like turnout is huge - unconfirmed but the indicators are that voters have turned out in big numbers - this would tend to favour the Labour and Lib Dems and SNP so we need to be very, very careful about assuming the polls have got this right - they have been very wrong before. Markets seem to be betting on a narrower Tory lead and in fact a hung parliament looks more likely than at any stage since the campaign started," commented Markets.com analyst Neil Wilson.

The euro stood at USD1.1118 at the European equities close, up from USD1.1088 late Wednesday, as new European Central Bank President Christine Lagarde set out to stamp her authority on the central bank.

Lagarde, who presided over her first monetary policy meeting, launched a review of the ECB's policy instruments.

The central bank kept its interest rates on main refinancing operations, the marginal lending facility and the deposit facility all unchanged at 0.00%, 0.25% and minus 0.50% respectively.

Lagarde said that price stability as represented by the ECB's annual inflation target of just below 2% would be at the "core and centre" of the strategic review.

The ECB head said the review was a "long overdue" and would be launched in January and run through to the end of the year. It would also include an examination of issues such as global warming, technological change as well as inequality in society.

The ECB downgraded its 2020 economic growth forecast for the eurozone amid a slew of global uncertainties, Lagarde said.

The Frankfurt-based bank now expects the eurozone to expand by 1.1% next year - down from the September forecast of 1.2% - before the economy picks up speed to 1.4% in both 2021 and 2022.

On inflation, the ECB now sees the harmonised index of consumer prices rising 1.2% in 2019, 1.1% in 2020, 1.4% in 2021 and 1.6% in 2022.

"Investors are no longer pricing in any further reduction in policy rates. Nonetheless, we are comfortable with our forecast that, despite some modest signs of economic stabilisation, the ECB will cut the deposit rate from -0.5% to -0.8% by the end of 2020. We also think it will add EUR10 billion of corporate bonds to its monthly asset purchases, bringing the total to EUR30 billion per month, from around the middle of next year," said analysts at Capital Economics.

Against the yen, the dollar was trading at JPY109.10, up from JPY108.68 late Wednesday.

Brent oil was quoted at USD64.38 a barrel at the London equities close, up from USD63.02 at the close Wednesday.

Elsewhere, Saudi Aramco's market value briefly hit the USD2 trillion valuation target sought by the kingdom's de facto ruler as the energy giant's share price surged again on its second day of trading.

The valuation milestone, which defies widespread scepticism from investors, was coveted by Crown Prince Mohammed bin Salman ever since he first floated the idea of listing the world's biggest oil firm four years ago.

Gold was quoted at USD1,466.10 an ounce at the London equities close, down from USD1,471.82 late Wednesday.

The economic events calendar on Friday has US retail sales at 1330 GMT.

The UK corporate calendar on Friday has annual results from ten pin bowling operator Hollywood Bowl Group.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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