World stock markets gain on US easing Huawei restrictions
European stocks with Asian exposure and chip makers gain the most as sterling falls below $1.27 for first time since mid-January
London — Stocks markets gained on Tuesday, with chip makers and stocks exposed to Asia among the best performers, after Washington temporarily eased trade restrictions imposed on China’s Huawei last week.
In Europe, the broader Euro Stoxx 600 edged up 0.3%, with Germany’s DAX 30 rising 0.6%, while France’s CAC 40 climbed 0.2%. At the close, China’s Shanghai Composite index was up 1.23%, while the blue-chip CSI300 index ended 1.35% higher.
US President Donald Trump’s government added Huawei to a trade blacklist last week, escalating trade tensions between the world’s two biggest economies. Washington then allowed Huawei to purchase American-made goods to maintain existing networks and provide software updates to existing Huawei handsets until August 19.
“The Huawei extension is in some sense providing a relief rally as it eases the worst fears of market participants that we are drifting towards a fully-fledged trade war,” said Aberdeen Standard’s head of global strategy, Andrew Milligan.
Chip makers Infineon and STMicro were up 1.4% to 3.5%, and the tech sector rose more than 1% after losing almost 3% on Monday. The automotive and parts suppliers sector was another top gainer, up as much as 1.1%.
In London, heavyweights HSBC, Prudential and Standard Chartered boosted the blue-chip index as markets on hopes if an easing in the trade tensions.
In Asia, gains in heavyweight Samsung Electronics helped South Korea’s Kospi stock index close up 0.3%.
The MSCI index of world shares, which tracks shares in 47 countries, was little changed at 0.01%.
“Equity markets remain hostage to developments in the ongoing US-China trade battle,” said Rupert Thompson, head of research at Kingswood. “We still believe some kind of deal will eventually be reached — most likely at a Xi/Trump meeting at the G20 Summit in late June.”
In Germany, Daimler got an additional boost after German newspaper Handelsblatt reported the company was looking to cut administration costs by 20%.
Italy’s biggest phone group Telecom Italia led gainers on the Stoxx 600 after posting first-quarter earnings in line with expectations and confirming its guidance for the next three years.
In currency markets, the British pound fell below $1.27 for the first time since mid-January, hit by dollar strength and expectations that Prime Minister Theresa May will fail to persuade cabinet colleagues to back an amended version of her Brexit withdrawal deal.
The pound slipped 0.2% to $1.2688 while against the euro it was down 0.14% to a new four-month low of 87.88p.
The dollar was supported by some safe-haven inflows, while Australia’s top policy maker Philip Lowe said on Tuesday that the central bank will consider the case for lower interest rates at its June policy meeting, pushing the Aussie dollar lower 0.5% to $0.6873.
Oil prices edged higher on US-Iran tensions and amid expectations that oil cartel Opec will continue to withhold supply this year. Brent crude futures, the international benchmark for oil prices, were at $72.18 a barrel at 6.51am GMT, up 21c, or 0.3%, from their last close.