Are Trade War Talks Supporting Investors’ Sentiments To Some Extent?

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Earlier, the global markets were being weighed by several macro-economic factors and the investors’ sentiments were also deteriorating. Some of the global market participants were even fearing for economic downturn. In these types of scenarios, the market players tend to avoid the deployments into the equity markets largely because of the uncertainty as well as risks which the equity investments hold. However, the global investors were largely relieved after the strong US jobs report for the month of December 2018 was out and when the market players took a hint that, in 2019, the US economy might see lesser rate hikes than expected earlier.

Currently, the global economy has been witnessing the negative impacts because of the trade wars between the US and China. But the market players are now speculating, based on the demonstrations, that the trade talks would materialize. If the negotiation does end on a positive note, the global markets would be benefited from the outcome.

Besides the overseas disturbance, UK is at a crossroad regarding the geo-political divorce from European Union (EU), which has inflicted worries on many sectors such as the airline sector, with its strict contingency plan released in December 2018 in case of a hard Brexit. The consequent effect is being felt across adjacent sectors. The extra pressure on sterling and its volatility resulting from a disorderly Brexit is a crucial issue.

In the world oil market, U.S. West Texas Intermediate (WTI) Crude climbed by 4.92 percent above USD50 at USD52.16 a barrel for first time in 2019 accompanied by crude oil output cuts by Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia. The OPEC cuts are intended to balance out the surge in US Crude output above 11.7 million barrel per day. Overall, the upswing in oil market can also be derived from the diminishing fear around US-China tension.

On January 9, 2019, FTSE 100 closed the trading at 6,906.63, up by 0.66%, aided perhaps by the hopes that the US and China trade war might come to an end. Therefore, the market players are of the view that the settlement might support the global economy. In addition, French stock market index CAC-40 also closed the trading at 4813.580 (+0.84%) while FTSE 250 was up about 238 points.

Talking about the London stock exchange listed companies, Taylor Wimpey PLC (TW) rose 6.2 percent, making them one of the big gainers for the day followed by ITV up by 4.91 percent at 137.85 GBX and WOOD GRP (J) up by 4.55 percent at 592.80 GBX. The fallers as the day concluded, entailed Royal Bank of Scotland Group down at 220.90 GBX (-2.17 percent) and Vodafone Group, down by 1.80 percent.

Further, the pan European STOXX 600 (STOXX) shares were up marginally, mostly driven by export-oriented auto and technology sector as US-China head to a rather peaceful conclusion in Beijing with details impending.

Even so, the bouncing back of global equity prices has assured the investors of a profitable ongoing trading.