Stocks - Europe to Bask in Post-Trade Deal Glow

By Peter Nurse

Investing.com - European stock markets are set to push higher at the open Thursday, taking their lead from the positive close on Wall Street overnight, with the signing of the trade deal between the U.S. and China being well received

At 02:05 ET (0705 GMT), the DAX futures contract traded 37 points, or 0.3% higher. France's CAC 40 futures were up 17 points, or 0.3%, while the FTSE 100 futures contract in the U.K. climbed 17 points, or 0.2%. Futures on the pan-eurozone index, the Euro Stoxx 50, rose 12 points, or 0.3%.

On Wednesday, the U.S. S&P 500 had risen 0.2%, and the tech heavy Nasdaq Composite added 0.1% and the Dow Jones Industrial Average jumped 0.3%, closing in record territory above 29,000. That accompanied the signing of the much-anticipated phase one trade agreement between the U.S. and China, pausing their two-year trade war that had weighed on global growth.

Under the terms of the deal, the U.S. cut tariffs on $120 billion in Chinese goods to 7.5% from 15%. China agreed to increase purchases in the U.S. by $200 billion over the next two years in manufactured goods, agriculture, energy and services.

Despite the gains on Wall Street overnight, some still regard the deal as fragile.

“The question is whether it is really feasible to create additional demand for U.S. goods equal to US$150 per Chinese citizen over the next two years,” ING analysts Timme Spakman and Iris Pang said in a research note. “Especially as the growth of the Chinese economy is structurally on a downward trend and authorities want to continue the fifteen-year trend of declining import growth.”

That said, “the deal takes away some of the trade uncertainty that affected businesses in the past two years,” ING added.

In Europe, the car industry body ACEA reported that new car registrations leaped 21% in December, albeit the figures were flattered as companies used aggressive promotional schemes to clear old stock before tough EU new emissions rules came into effect at the start of the year.

Also of note, the European Central Bank is due to publish the account of its last monetary policy meeting, held in December, at 7:30 AM ET (12:30 GMT). At the meeting, the first presided over by new President Christine Lagarde, the Governing Council decided to leave its key rates and quantitative easing program unchanged.

Elsewhere, oil climbed, boosted by the signing of the trade deal as well as U.S. crude inventories falling by more than expected. These inventories fell by 2.5 million barrels, compared with analyst expectations of a drop of 500,000 barrels, according to data from the Energy Information Administration, an agency of the U.S. Department of Energy.

At 2:05 AM ET (07:05 GMT), U.S. crude futures traded 0.6% at $58.16 and the international benchmark Brent contract rose 0.6% to $64.36. Gold futures for February delivery on New York’s COMEX dropped 0.1% to $1,553.20.

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