It seems that the US is taking one step back from its hard policy on China – or maybe it is just the US President – with softer comments about Huawei’s CFO who was recently arrested in Canada and is awaiting extradition to the US.
In unusually conciliatory fashion President Trump said he would intervene in the arrest if it would serve national security interests or help make a trade deal with China. But the comment pits Trump against his domestic law enforcement agencies which have wanted to arrest Meng Wenzhou, the daughter of Huawei’s founder, for months on suspicion that she had helped the smartphone and networking equipment maker circumvent sanctions on Iran.
Though Beijing will no doubt interpret Trump’s comments as a sign of goodwill it is not clear if the US President can actually intervene and what kind of legal implications it would have for him if he did. While analysts were left to ponder that the markets sprang into action with the Dow Jones Industrial Average rising 1.4% and the Nasdaq gaining 1.77% in early trade.
China car tariff cut helps BMW, Daimler
The FTSE and European gauges also felt gloom lifting particularly as China responded with several concessions of its own. The country decided to cut tariffs on imports of cars from the US by 25%, a move that helped German car makers BMW (MI:BMW) and Daimler (LON:0NXX) as most of their China-bound cars are shipped from the US rather than Europe.
The DAX bounced up 1.63% and the FTSE followed with a 1.22% rise despite the fever pitch that is developing around Brexit at home.
Pound rises ahead of May vote
Currency markets were surprisingly buoyant in the wake of the no-confidence vote against PM Theresa May announced this morning, increasingly betting that the Prime Minister may be able to withstand the political pressure from her party and remain the leader of her party.
In a secret ballot due later this evening the party’s 315 MPs will have to rustle up a clear 51% majority to remove her from her post. But for months Conservative MPs have been so deeply divided on anything to do with Brexit that it is far from given that they will stand united this evening. If they do, the new Conservative leader is likely to be challenged by Labour and other opposition parties with a Bremain becoming an increasingly likely option.
Ahead of the vote the pound notched up 1.35% against the dollar and gained 0.9% against the euro. The dollar weakened against most major currencies in the wake of lower than expected inflation numbers which fuelled already existing expectations that the Fed will hold back on some of its planned rate hikes next year.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.
Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.