Doubt over trade picks up

PARIS (Reuters) – Uncertain at the opening, the main European stock markets are trending down after an hour of trading Thursday, investors favoring caution in the face of new signs of tension between the United States and China to a few hours of the resumption of their commercial negotiations.

Luxury values, however, stand out after the better than expected third quarter of LVMH.

In Paris, the CAC 40 lost 0.05% to 5496.45 points around 08:00 GMT. In Frankfurt, the Dax yields 0.27% and in London, the FTSE 100 is down 0.44%. The pan-European index FTSEurofirst 300 was down 0.51%, EuroStoxx 50 in the euro area by 0.28% and the Stoxx 600 by 0.39%.

The top US and Chinese officials in charge of the trade war issue are in Washington for the first time since late July, in principle for two days of talks. On Wednesday, Donald Trump spoke of "great chances" to conclude an agreement but a Chinese official, on condition of anonymity, said that reaching a compromise would be "not an easy task".

The latest illustration of the persistent tension between the two parties is that the Chinese Foreign Ministry has called on the United States to stop "unreasonable pressure" on Chinese companies, including giant network equipment giant Huawei.

China remains under threat of a 30% increase in US tariffs on some 250 billion products imported into the United States as of October 15.

"The policy of giving and giving has been going on for a long time and it is hoped that both countries will be able to reach an agreement to define a ceasefire," says Naeem Aslam, an analyst at TinkMarkets.com, pointing out that "a ceasefire would not mean the cancellation of existing tariffs, which weigh on the two economies".

The nervousness of the markets is also fueled by the uncertainty on the Brexit, before a new meeting between British and Irish leaders.

VALUES

Among the largest increases in the Stoxx 600, LVMH jumped 3.88% after the announcement of 17% growth, well above expectations, of its sales in the third quarter.

The parent company of Louis Vuitton drives in its wake most of the major European values ​​of luxury: Kering takes 2.97%, Hermes 0.61%, Richemont 1.49% and Moncler 1.6%.

On the downside, Philips falls 8.35% after warning that it will not reach its margin target this year due to the impact of customs barriers.

IN ASIA

The Tokyo Stock Exchange ended up ahead of the latest statements from Beijing, the market has favored encouraging news reports on the climate of US-China talks: the Nikkei index finished up 0.45% after giving up at 0.7% and the broader Topix was virtually unchanged at the close while shedding 1.05% at the low of the day.

Chinese markets also ended in the green: the SSE Composite Shanghai, which had begun in decline, posted a closing gain of 0.78%.

A WALL STREET

The NYSE ended up on Wednesday, supported by news reports that China was willing to seal a partial trade deal with the United States.

The Dow Jones index gained 181.97 points, or 0.7%, to 26,346.01, the Standard & Poor's 500, wider, took 26.43 points, or 0.91%, to 2,919.49. Nasdaq Composite rose 79.96 points, or 1.02%, to 7,903.74.

Technology stocks supported the trend, with Microsoft winning 1.89%, Apple + 1.17%. The semiconductor-related companies index, particularly exposed to China, finished up 1.74%.

RATE

Eurozone government bond yields are up again, at -0.542% for the ten-year German Bund.

In the US bond market, benchmark bond yields ended higher on Wednesday as the session was marked by renewed optimism on trade as well as the auction of $ 24 billion worth of 10-year bonds. At the end of the session, the 10-year Treasuries yielded 4.5 basis points to 1.584%.

The market is waiting at 11.30 GMT for the release of the minutes of the European Central Bank (ECB) monetary policy meeting of September 12th, followed by consumer price data in the United States before a 30-year treasury bill auction .

EXCHANGE

Stable early in the day in Asia, the dollar is now clearly down on other major currencies, the index measuring its fluctuations against a reference basket down 0.31%.

The euro benefits from it to rise above 1.10 dollar.

The Chinese yuan remains up against the dollar even if it reduces its gains after the last statements of Beijing.

OIL

Crude prices are down slightly, uncertainty about US-China trade fueling questions about the evolution of global demand.

Brent drops 0.43% to 58.07 dollars per barrel and US light crude (West Texas Intermediate, WTI) yields 0.57% to 52.29 dollars.

Doubts about the outcome of the Washington talks add to the downward impact of the stronger than expected rally in the US last week.

(Marc Angrand, edited by Jean-Stéphane Brosse)