Global Stocks Hit 6 Month High On, Drumroll, Renewed "Trade Talk Optimism"
This is the part in Groundhog Day where Phil Connors kills himself again, and again, and again.
With stocks itching for a new excuse to levitate higher, they got that overnight when a Reuters report on fresh "progress" in the U.S.-China trade talks and renewed "optimism" in a trade deal helped propel world stock markets to a 6-month high on steered investors away from save havens such as the Japanese yen, even as 10Y treasury yields dipped modestly, as the same catalyst that has driven stocks higher on virtually every single day in the past quarter has continued to do so again and again, right out of the cult groundhog movie.
“It seems like bullish sentiment has decent grip for now and everyone is focused on the year to date performance of the equity markets,” said Naeem Aslam, chief market analyst at TF Global Markets (UK) Ltd in London.
Overnight Reuters reported that US negotiators tempered demands that China curb industrial subsidies as a condition for a trade deal after strong resistance from Beijing, marking a retreat on a core U.S. objective for the trade talks. According to the report, in the push to secure a deal in the next month or so, U.S. negotiators have become resigned to securing less than they would like on curbing those subsidies and are focused instead on other areas where they consider demands are more achievable, Reuters sources said. Those include ending forced technology transfers, improving intellectual property protection and widening access to China’s markets, the sources said. China has already given ground on those issues.
“It’s not that there won’t be some language on it, but it is not going to be very detailed or specific,” one source familiar with the talks said in reference to the subsidies issue.
Separately, on Saturday during the latest IMF conclave, Treasury Secretary Steven Mnuchin said the US is "hopefully very close" to final round of China talks; adding that the U.S. is open to facing enforcement penalties which work "in both directions." all of which helped spawn a fresh sense of optimism that a deal announcement was imminent.