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European stocks strike highest level since January last year

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Via Financial Times

European stock markets climbed to a near two-year high, with Wall Street stock futures also rising, following positive signals around US-China trade negotiations.

Europe’s bellwether Stoxx 600 on Monday, its first day of trading since the S&P 500 struck a record, rose 0.9 per cent during morning trade to its highest since January last year. US stock futures imply another all-time high on Monday when Wall Street opens. Other bourses followed suit with London’s FTSE 100 and Frankfurt’s Dax accelerating their advances to 1.1 per cent.

S&P 500 futures were pointing to a 0.6 per cent advance at the open. The US index’s gains on Friday came after a strong US jobs report brought its rise this year to 25.5 per cent. Europe’s Stoxx mirrored the S&P 500 as it notched a 22 per cent advance this year and pushed towards a four-year high. Monday’s gains were boosted by Ryanair and Siemens Healthineers, which both clocked about a 7 per cent jump.

An apparent further thawing of US-China trade relations also boosted equity markets. Wilbur Ross, the US commerce secretary, said on Sunday that he was “quite optimistic” that the remaining obstacles in the first phase of US trade negotiations with China could be overcome soon, adding that the Chinese and US leaders still planned to meet this month. 

“In light of recent developments and apparent progress in US-China negotiations, we are shifting our view and no longer believe tariffs will increase further,” said Goldman Sachs analysts in a note. “Instead, we expect that tariffs on imports from China will remain at current levels through 2020.”

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Meanwhile, data on Friday showed that the US economy added more jobs than expected in October, defying predictions that a year of slowing manufacturing growth would stunt consumer spending and company hiring. 

“Some green shoots of data recovery were seen towards the end of last week in the US,” said Deutsche Bank strategist Jim Reid.

In Asia, Hong Kong’s Hang Seng index hit a three-month high, adding 1.7 per cent, and China’s CSI 300 of Shanghai- and Shenzhen-listed shares edged 0.7 per cent higher. South Korea’s export- and electronics-heavy benchmark Kospi gained 1.4 per cent to a four-month high, while Australia’s S&P/ASX 200 was up 0.3 per cent, as a lacklustre set of earnings from bank Westpac capped enthusiasm. The Japanese market is closed for a public holiday.

Investors will be watching Christine Lagarde’s first speech as European Central Bank president, scheduled for Monday evening in Berlin.

“She will likely discuss the monetary package implemented by the ECB in September,” analysts at UniCredit said in a note on Monday. “In this regard, it will be crucial how she intends to align the different views, especially on the new round of quantitative easing, within the governing council.”

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