Weak manufacturing reports from Britain and the US prompted investors to seek out safe-haven assets (JEFF KOWALSKY)

London (AFP) – The world’s stock markets mostly rose on Tuesday, with investors seeing positive signs amid trade tensions between the US and China — and the US and Mexico — that offset lingering concerns of a global economic slowdown.

In Europe, Frankfurt’s DAX 30 index was the lead performer, up more than one percent in afternoon trading even though data showed eurozone inflation dropped sharply in May, a possible sign of a slowdown sparked by the US-China trade war.

Wall Street opened strongly as well, with Briefing.com analyst Patrick O’Hare saying the market was “reportedly in a better mood, because it is less depressed about the trade issues”.

Fears of an economic slowdown have mounted in recent days after US President Donald Trump threatened Mexico with tariffs, adding to anxieties over the Washington-led trade war with Beijing.

O’Hare said Tuesday’s positivity “stems from a Washington Post article that indicates GOP lawmakers are discussing the possibility of holding a vote that could potentially block President Trump’s tariff plan for Mexico.”

He added that there was also “a declaration from China’s Ministry of Commerce that it hopes the US can meet half way in trade negotiations”.

During a visit to London however, Trump showed no sign of backing down on the Mexican tariffs, saying Mexico must stop the “invasion” of migrants trying to enter the US.

In comments more likely to be welcomed by the markets, he also said that “everything is on the table” in trade talks with Britain after it leaves the EU and that he was certain Washington and London would reach an understanding on China’s telecoms giant Huawei that could avoid disruption in intelligence-sharing.

– US rate cut soon? –

Market sentiment had been buoyed after a member of the Federal Reserve’s interest rate setting committee, James Bullard, said Monday that a rate cut “may be warranted soon”.

“However, while the US is talking about rate cuts, the Australians are busy doing it, with the Reserve Bank of Australia cutting for the first time in three-years,” noted Joshua Mahony, senior market analyst at IG trading group. 

Australia’s central bank cut rates by 25 basis points to a historic low of 1.25 percent as the pace of growth slowed to levels not seen since the global financial crisis.

The US dollar weakened against its main rivals overnight after Bullard’s comment, but rebounded on Tuesday.

US tech giants rebounded a day after they sank on reports that Washington planned to intensify antitrust scrutiny of the sector.

The Wall Street Journal, citing unnamed sources, reported that the Justice Department and Federal Trade Commission had agreed to coordinate antitrust enforcement over tech companies, with Justice taking the lead on Google and the FTC handling Facebook and some aspects of Amazon.

The tech-rich Nasdaq Composite Index was up 0.8 percent in early trading on Tuesday after dropping 1.6 percent the day before. 

– Euro zone inflation drops –

Meanwhile, the EU’s statistics agency said eurozone inflation last month fell to 1.2 percent, significantly lower than the 1.7 percent logged in April.

That puts pressure on ECB governors to do more to boost the economy when they meet on Thursday.

On the corporate front, shares in Shell dropped around 0.75 percent as lower oil prices offset news that the energy giant expects a significant jump in shareholder returns in the next few years.

“Royal Dutch Shell’s… potential to return $125 billion through dividends and share buybacks between 2021 and 2025 failed to provide the energy required,” noted Russ Mould, investment director at AJ Bell.

– Key figures around 1400 GMT –

London – FTSE 100: UP 0.1 percent at 7,191.52 points

Frankfurt – DAX 30: UP 1.13 percent at 11,926.06

Paris – CAC 40: UP 0.3 percent at 5,258.69

EURO STOXX 50: UP 0.7 percent at 3,324.78

New York – Dow: UP 0.9 percent at 25,056.33

Tokyo – Nikkei 225: FLAT at 20,408.54 (close)

Hong Kong – Hang Seng: DOWN 0.5 percent at 26,761.52 (close)

Shanghai – Composite: DOWN 1.0 percent at 2,862.28 (close)

Euro/dollar: DOWN at $1.1231 from $1.1242 at 2100 GMT Monday

Pound/dollar: UP at $1.2672 from $1.2665 

Euro/pound: DOWN at 88.65 pence from 88.77 pence 

Dollar/yen: UP at 108.18 yen from 108.07 yen 

Oil – Brent Crude: DOWN 28 cents at $61.00 per barrel

Oil – West Texas Intermediate: DOWN 20 cents at $53.01 per barrel

burs-dl/wai

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.