Wall Street gains accelerated on Thursday, handing stocks their third straight day of gains, on growing hopes the US and Mexico will agree a deal to avert new tariffs.
The S&P 500 was up 0.6 per cent, following a Bloomberg report that US officials are considering delaying tariffs on Mexican imports to allow for further talks. The Nasdaq Composite also picked up steam, rising 0.5 per cent after earlier trading near break-even.
Investors have been keeping a close eye on trade negotiations between the two neighbours. A meeting between US and Mexican officials on Wednesday, designed to stave off the Trump administration from imposing a 5 per cent tariff on Mexican goods starting next Monday, ended without result. President Donald Trump, who tweeted yesterday that “progress is being made, but not nearly enough”, has threatened to slap escalating trade levies on Mexico unless it increases efforts to curb illegal immigration into the US.
In Europe, stocks lost momentum after the European Central Bank stopped short of sending further dovish signals to the market as it met expectations by readying more stimulus measures designed to boost struggling economic growth.
But there was room for the euro to rally 0.5 per cent, leaving it on course for one of its best single-session gains of the month.
Stocks drifted lower and eurozone bond yields bounced off notable lows as investors measured the words of Mario Draghi, the ECB’s president, at a press conference held after the announcement, and the implications of the currency area’s faltering growth.
The Europe-wide Stoxx 600 failed to hold gains seen before the ECB announcement and fell back to be fractionally lower. Frankfurt’s Xetra Dax 30 followed a similar pattern, but fell 0.2 per cent overall for the day. London’s FTSE 100 added 0.6 per cent.
Financials failed to hold gains made in the immediate aftermath of the announcement of stimulus, which took the form of cheap auctions of central bank cash for the sector, designed to encourage further lending. The Stoxx banking index was down 1 per cent, having been up as much as 0.8 per cent beforehand.
“For the time being at least, the ECB has resisted taking radical action. But if the economy continues to stagnate, the ECB will be forced to intervene. With rates already at 0% and no fiscal levers to pull, options are somewhat limited. Turning the QE taps back on by the end of the year is an increasingly probable scenario”
Nancy Curtin, Chief Investment Officer at Close Brothers
Germany’s 10-year Bund yield slipped to minus 0.239 per cent, back around a record low. The yield had earlier ticked up 1 basis point, with the lack of a more deeply dovish feel to the ECB’s statement setting the tone to trade.
The yield on the benchmark 10-year US Treasury was up 0.7 basis points at 2.1295 per cent.
The ECB’s policy meeting followed a series of dovish turns from central banks in response to mounting concerns over global growth.
New York’s S&P 500 has advanced 3.3 cent this week, aided by a Federal Reserve that has signalled a willingness to cut interest rates.
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