Global stock markets rallied on reports that US President-elect Donald Trump’s tariff regime won’t bite as hard as initially feared, allaying concerns about the broader impacts on manufacturing chains and international trade.
Stocks in Europe surged with France’s CAC 40 climbing 2.2% and Germany’s DAX advancing 1.6% with automakers rallying on The Washington Post report that Trump’s aides are looking at applying the tariff regime on critical imports only. Trump later scotched the report.
Luxury brands exposed to Chinese consumers also gained, with the likes of LVMH , Hermes , Kering and Richemont advancing on optimism their sales into Asia’s biggest economy will improve.
The greenback fell on reports of the softer tariff regime, with the kiwi rising to 56.40 US cents at 7am in Auckland from 56.22 cents yesterday.
That upbeat sentiment extended to Wall Street, and the tech-heavy Nasdaq got a further boost – up 1.5% in afternoon trading – as chip stocks gained on Foxconn's record quarterly revenue and Microsoft’s plans to invest US$80 billion on artificial intelligence-enabled data centres in the current financial year.
South Pacific optimism
That optimism is pointing to a stronger day in Australian markets, with ASX futures indicating a 0.6% increase for the S&P/ASX 200 index.
US banks were also broadly stronger after Federal Reserve vice chair for supervision Michael Barr said he would step down, avoiding a potential showdown with the incoming White House administration which has criticised the central bank’s tough stance on regulation.
Meanwhile the first US initial public offering paperwork of the year was filed, with Smithfield Foods set to return to Wall Street after more than a decade of private ownership by Hong Kong’s WH Group. Morgan Stanley, Bank of America and Goldman Sachs are the lead underwriters on the deal.
Meanwhile, Canada’s currency held on to yesterday’s gains when prime minister Justin Trudeau confirmed rumours he will step down as leader of the ruling Liberal Party as he grows increasingly unpopular ahead of this year’s general election.
The kiwi traded at 81.01 Canadian cents at 7am in Auckland from 80.97 cents yesterday, having shed a quarter-cent when the reports of his exit first emerged.
Reporting by Paul McBeth. Image from Kurt Cotoaga on Unsplash.