By Barbara Kollmeyer, MarketWatch
Ken Childress Photography/BHP Billiton
U.K. stocks on Tuesday finished at the highest level in about six weeks, joining a global equity rally spurred by comments from President Xi Jinping, who promised to open China’s markets.
Xi’s pledge to foreign companies, made at a major conference in Asia, may help to soothe fears of an all-out trade war between the U.S. and China, a factor in the recent bouts of volatility for equities.
How markets are moving
Sterling moved to a two-week high after comments from Bank of England policy maker Ian McCafferty that there should be no delay in raising interest rates, speaking in an interview with Reuters.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0217% hit $1.4178 against the dollar in the wake of the remarks, up 0.3%, against $1.4130 late Monday in New York.
Against the euro /zigman2/quotes/210561278/realtime/sampled GBPEUR -0.0693% , sterling was flat at €1.1465.
What’s driving markets
China’s Xi pledged better access for foreign companies to his country’s markets in a keynote speech at the Boao Forum, a government-backed event for business and political leaders held on Hainan island. Among the promises was a vow to cut tariffs on imported autos and speed up access to the insurance sector.
However, the World Trade Organisation said Tuesday that China has filed a complaint over U.S. tariffs on steel and aluminum products, the Associated Press reported.
President Donald Trump’s administration has been targeting Chinese goods in its plans to impose tariffs on imports. That has prompted a tit-for-tat exchange of trade levies between the world’s two biggest economies in recent days, and the tensions have taken markets on a volatile ride at times.
In London, mining stocks gained after Xi’s comments, as China is a major buyer of industrial and precious metals.
In other geopolitical news, Trump and his national security team have started to lay the groundwork for a possible military strike against the forces of Syria’s leader, Bashar al-Assad, over a suspected deadly chemical attack on civilians.
What strategists are saying
“The lack of any ramping-up of the U.S./Chinese trade-war-by-rhetoric is helpful, however, and more importantly has been well received in Asian markets where risk is ‘on’ equities are up across the board and even the Turkish Lira’s stronger as Europe opens,” said Kit Juckes, chief foreign-exchange strategist for Société Générale, in a note to clients.
Mining-related stocks were out in front with gains. Anglo American PLC /zigman2/quotes/201381512/delayed UK:AAL +1.59% led the London index and the sector higher with a 5.1% gain, while Antofagasta PLC /zigman2/quotes/200173667/delayed UK:ANTO +0.51% closed up 4.5%. Rio Tinto PLC /zigman2/quotes/202627887/composite RIO +1.21% /zigman2/quotes/208934945/delayed UK:RIO +1.17% /zigman2/quotes/208934945/delayed UK:RIO +1.17% gained 3.1%, while BHP Billiton PLC /zigman2/quotes/201400686/delayed UK:GLEN -0.40% added 3.5%.
Glencore PLC /zigman2/quotes/201400686/delayed UK:GLEN -0.40% /zigman2/quotes/201400686/delayed UK:GLEN -0.40% /zigman2/quotes/201400686/delayed UK:GLEN -0.40% rose 2.2%. The Anglo-Swiss mining and commodity-trading company said Chief Executive Ivan Glasenberg has stepped down as director of Russia-based United Co. Rusal PLC /zigman2/quotes/204335089/delayed HK:486 +1.66% , which fell 8.7% in Hong Kong after a 50% plunge on Monday in the wake of the latest U.S. sanctions.
Shares in Evraz PLC /zigman2/quotes/202291633/delayed UK:EVR +3.65% , a steel and mining company with operations in Russia but London headquarters, rebounded 1.1% after leading the FTSE’s losers Monday with a 14% loss.
United Utilities Group PLC closed down 2.8%, with the water company seen as suffering from a flight from less risky stocks. Centrica PLC /zigman2/quotes/205228367/delayed UK:CNA +0.61% lost 0.7% after its British Gas division said it would raise its tariffs due to higher costs.