Friday 7 February 2020

Markets rise as China cuts tariffs on US imports

Markets rose on Thursday.

The S&P 500 rose 0.3 percent, the STOXX Europe 600 rose 0.4 percent and the Shanghai Composite jumped 1.7 percent.

The coronavirus outbreak that started in China has now hit 28,256 cases globally and at least 565 deaths but virus concerns took a back seat on Thursday as China announced that it will start cutting tariffs on US imports on 14 February.

“China cutting tariffs is a driver of today’s gains,” said J.J. Kinahan, chief market strategist at TD Ameritrade.

UOB Private Bank’s Francis Tan, though, said that “a lot more important...is that there’s ample liquidity in the market”.

Meanwhile, though, some analysts are sounding words of caution.

“The odds that the next 10% move is to the downside versus the upside, I think, are much higher,” said Miller Tabak + Co.’s lead strategist Matt Maley, who noted that the market has been “priced for perfection” for a while, making it harder to rally much higher from here.

Citigroup’s chief US equity strategist Tobias Levkovich said in a recent note that nearly “every client we talk to wants to buy the dip, and that is not comforting”, adding that “we are reticent to think that impact [of the coronavirus] is behind us now”.

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