Stocks diverge awaiting China-US trade talks
LONDON: Stock markets diverged and the dollar dropped on Monday as investors digested key economic data and looked to a fresh round of China-US trade talks.
Asian markets caught up with gains Friday on Wall Street and in Europe on news that the United States created a forecast-beating 139,000 jobs last month.
That helped offset official data on Monday showing Chinese exports grew at a slower pace than expected last month and concerns over the US economy amid President Donald Trump's tariffs blitz.
The Chinese data "created hope of further interventions from Beijing to stoke the economy and investors also looked ahead to talks between US and Chinese officials in London aimed at reaching an agreement on trade", noted AJ Bell investment director Russ Mould.
The talks come days after Trump and Chinese counterpart Xi Jinping held their first publicly announced telephone talks since the Republican returned to the White House.
They were helped by news that Beijing had on Saturday approved some applications for rare-earth exports, while US aviation giant Boeing will start sending commercial jets to China for the first time since April.
The impact of the trade row was highlighted on Monday in data showing Chinese exports to the United States sank more than 34 per cent on-year in May and almost 13 per cent from the previous month.
However shipments to other regions, including the European Union and countries in the Association of Southeast Asian Nations, surged.
Separate data showed Chinese consumer prices fell in May for the fourth straight month.
Optimism that the two sides could make a breakthrough boosted Asian markets, with Hong Kong up more than one per cent, while Tokyo, Shanghai, Seoul, Singapore, Mumbai, Bangkok, Taipei and Manila also advanced.
However, London, Paris and Frankfurt struggled around the half-way stage.
The Asian gains followed a strong lead from Wall Street, where all three main US indices closed more than one per cent higher Friday.
Eyes will now turn to the Federal Reserve as it decides whether to lower interest rates, even as many economists warn that Trump's tariffs could reignite inflation, hit supply chains and drag on consumer sentiment.
"The May minutes and recent comments by several (policy board) members... suggest the Fed is highly attentive to the risk that tariffs will lead to a persistent inflation shock," wrote analysts at Bank of America.
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