NEW YORK -- Global stocks rose Wednesday on optimism over US-China trade talks, while oil prices gained after the International Energy Agency reported lower output from OPEC producers.
Bourses in Asia and Europe advanced, taking cues from Tuesday afternoon when Wall Street rallied on President Donald Trump’s statement that he could delay new tariffs on Chinese goods set to take effect March 1 if a deal is close.
US stocks also climbed Wednesday, although the gains were more modest than in the prior day.
A report in the South China Morning Post said Xi would personally meet the US delegation in Beijing, suggesting a redoubled effort to make progress on a deal.
Some analysts struck a cautious tone, however, noting that much work needs to be completed before a framework trade agreement between China and the US could be reached.
“The rally in stocks has been based on hope rather than any concrete agreements overnight,” warned Oanda senior analyst Jeffrey Halley, predicting short-term volatility to come as headlines emerge from Beijing.
Fiona Cincotta at City Index agreed that “if we don’t start seeing something more tangible by March investors are going to get nervous again.”
Meanwhile, Briefing .com analyst Patrick O’Hare suggested some of the market’s latest gains are the result of little more than momentum and the fear of missing out on further gains.
O’Hare critiqued the market’s positive reaction to the dimming likelihood of another US government shutdown, calling the response evidence of the “dysfunctional” nature of Washington.
“The trading excitement over avoiding another government shutdown is like getting excited over the idea that your bank is going to be open for business on a Wednesday,” he said in a note posted to the financial website.
“That’s not a surprise. It’s a normal course of business for banks to be open on a Wednesday.”
Meanwhile, oil prices gained, with the Brent futures contract in London gaining almost two percent following an IEA report that said the Organization of the Petroleum Exporting Countries in January had largely complied with an agreement to cut output.
The dollar continued to advance against the euro. Besides lackluster eurozone data, drivers of the currency’s retreat include political troubles in Spain, said BK Asset Management’s Kathy Lien.
The pound briefly rose above $1.29 before falling back as Prime Minister Theresa May was accused by the opposition of “running down the clock” and “playing chicken” with Brussels over Brexit talks.