LONDON (Reuters) - China’s President Xi Jinping has helped buoy world markets just ahead of what promises to be a bumper first quarter U.S. earnings season.
After weeks of Washington and Beijing swapping trade threats, Xi restated China’s commitment to free trade and lower import barriers and specifically addressed major U.S. concerns about intellectual property theft and greater access to foreign firms in Chinese markets.
The conciliatory tone chimed with that of some Washington officials, who indicated at the weekend that talks between the two were now in order before any new restrictions would be imposed.
After a decent gains for the major Wall St stock indices on Monday, S&P500 futures were up 1.4 percent overnight after Xi’s speech and Asia’s major bourses rallied too.
Shanghai and HK stocks were both up more than 1 percent, while Tokyo’s Nikkei closed up half a percent and Seoul’s Kospi was up 0.3 percent.
European stocks looked set to catch the slipstream and gain about 1 percent at the open too.
Russia’s rouble firmed 0.5 percent after Monday’s slump of over 4 percent against the dollar in the wake of the latest U.S. sanctions - its worst day in over three years as the sanctions list included the likes of metals businessman Oleg Deripaska and his companies and investors worried about just how wide sanctions could go if Russia were to be found complicit in events such as chemical attacks in Syria or even the recent spy attack in Britain.
Investors are now watching whether Monday’s losses of up to 10 percent on Russian stocks will be extended and whether the rouble fall will start to infect local debt markets.
European earnings are slowly coming back into focus although early season’s releases appear to be mixed.
Shares in Givaudan are expected to fall 1-2 percent after its first-quarter sales growth missed expectations, while LVMH could get a boost after undiminished appetite from Chinese consumers helped it post a better-than-expected rise in first quarter sales, prompting a few target prices upgrades.
LVMH results could also provide support to other luxury names such as Hugo Boss.
In M&A, Bayer is up nearly 3 percent in pre-market trade on a report it has reached a deal with the United States for approval to buy Monsanto, clearing the last major obstacle to the merger.
A look at the day ahead from EMEA markets editor Mike Dolan. The views expressed are his own.
Editing by Alison Williams