LONDON (Reuters) - In announcing his decision to pull the United States out of the Paris accord on tackling climate change, Donald Trump declared that he was "elected to represent the citizens of Pittsburgh, not Paris".
No matter that the mayor of that steel-making city quickly retorted that it was actually a backer of the Paris pact, Trump’s intended message was clearly that of a focus on U.S. interests versus global concerns.
Today the rest of the world starts salvaging what it can of the agreement, with Europe and China set to make a joint declaration in Brussels vowing to stick to its promises in full. That will involve cutting back on fossil fuels, developing more green technology and helping raise $100 billion a year by 2020 to help poorer countries cut their emissions.
Their implicit message will be that the economics will be increasingly stacked against carbon, not in favour of it. Fresh from his handshake/arm-wrestling match with Trump at NATO last week, France’s Emmanuel Macron has cocked a further snook at the U.S. leader by inviting American climate change scientists to relocate to Paris and work on new green technologies.
In the meantime, Macron welcomes Narendra Modi to the French capital as part of the Indian leader’s European tour. Modi - who heads the world’s third-largest carbon emitter - has yet to say what he thinks of Trump’s move. He is expected to stay on board the Paris deal but it will be interesting to hear what he says to Trump’s remark that India made its participation contingent on getting “billions and billions and billions of dollars in foreign aid from developed countries”.
The sweet spot for world markets continues, with global stock indices hitting new records as the latest U.S. and European economic numbers impress but with the absence of any notable inflation pressures that would scare central banks into aggressive tightening.
The market mood ahead of the U.S. May payrolls today is likewise, with Thursday’s ADP private sector jobs reading almost 70,000 above forecasts and boding well for the consensus call of 185,000 new payrolls last month. And average earnings growth is expected to remain moderate at just 0.2 percent for the month. With Brent crude oil falling back below $50, commodity-fueled inflation looks to be on the back burner too.
Another Fed rate rise this month is now seen as a sure thing, but markets are still debating whether there will be just one more another before the year is out.
In Europe too, manufacturing surveys continue to beat expectations while inflation slumbers about 1.4 percent. The ECB may well give some further guidance on the durability of its existing QE plan next week, but it is in no rush to signal any form of tightening. And so gains of 0.7 percent for Wall St stocks overnight have set the tone for Friday as has the fresh drop in the ViX implied volatility index back below 10 percent.
Japan’s Nikkei225 and South Korea’s Kospi led the way in Asia with gains of more than 1 percent, with HK up too. Shanghai underperformed and ended flat. European stock futures are pointing to gains of up to one percent, the dollar index and Treasury yields are flat.
Editing by Hugh Lawson