Though the OECD was very keen to stress the damage of the US-China trade war – both done and potential – the markets were determined to celebrate a very minor concession in the battle between the superpowers.
Cutting its global growth forecasts to 3.2% for 2019, down from 3.5% in 2018, the OECD specifically highlighted the dangers of escalating the trade war further, stating that it could strip out 0.7% off of global GDP by 2021-22. It makes a certain amount of sense, then, that the markets would greet any sign that the relationship between the US and China hasn’t completely disintegrated as reason for cheer.
Said reason here was the news that the US would be allowing Huawei a 90-day grace period to continue to work with American manufacturers, phone companies and broadband networks before returning to the Entity List. The reason behind this is likely some trademark lack of forethought from the Trump administration, the government failing to anticipate the effect the blacklisting would have on the US side of things. However, it also is a bit of fire control for the bridge currently burning between the two nations, keeping the relationship alive ahead of next month’s G20 meeting in Japan.
Building on the gains seen just after the bell, the FTSE crossed 7360 with a 0.8% rise, while the CAC rose 0.9% and the DAX added 140 points. The Dow Jones is set to follow suit this afternoon, with a 150 point increase – one that would lift it back above 25800 – pencilled in for the US open.
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