Stocks Drift Ahead of Sunday Deadline on Tariffs -- Update
December 12 2019 - 8:47AM
Dow Jones News
By Caitlin Ostroff
Global stocks drifted Thursday as investors awaited developments
on the China-U.S. trade talks ahead of a weekend deadline, as well
as cues on the health of the European economy and the U.K.'s next
steps on Brexit.
Futures linked to the Dow Jones Industrial Average were flat, as
was the pan-continental Stoxx Europe 600 index.
Markets are in a holding pattern ahead of President Trump's
decision on a fresh round of tariffs that are set to go into effect
Sunday on roughly $156 billion of Chinese goods. The Wall Street
Journal reported earlier this week that negotiators on both sides
are working to delay the levies. The tariffs, which threaten to
deepen China's economic problems and prompt retaliatory action,
could also weigh on prices of cellphones, laptops and apparel for
American consumers.
"People are just sort of trying to read the tea leaves of
whether the relationship is improving," said Emiel van den
Heiligenberg, head of asset allocation at Legal & General
Investment Management. The market may be too optimistic in its view
that the tariffs will be pushed back, he said.
Later in the day, investors will get a sense of the approach
European Central Bank President Christine Lagarde is likely to take
in her new role when she holds her first public briefing following
a rate-setting meeting. The ECB held interest rates at minus
0.5%.
On Wednesday, the U.S. central bank's policy makers indicated
that they believe interest rates are low enough to stimulate growth
in the world's largest economy as they opted to leave monetary
policy unchanged. The outlook is "a favorable one," Chairman Jerome
Powell said. The Fed's recent market interventions to keep
short-term rates stable are also working, he said.
On a day of weak trading, the U.K.'s FTSE 100 stood as an
outlier, gaining 0.5% as investors awaited the outcome of the
general election.
Politicians in both the major political parties are signaling an
end to years of constrained fiscal policy as the country prepares
to exit from the European Union, and the vote results will play a
crucial role in determining the course of Brexit. While a
parliamentary majority for the Conservative Party is seen as most
likely, recent polls have shown that Prime Minister Boris Johnson's
lead has narrowed.
The British currency, which has rallied against the dollar in
the past two weeks to surpass $1.32, fell 0.2% Thursday, with one
pound buying $1.3167.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
December 12, 2019 08:32 ET (13:32 GMT)
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