UK Shares Start the Year with a Rally as China Eases Trade Policy

UK shares started 2020 with a rally as investor’s confidence is bolstered by news of Beijing easing its monetary restrictions and US President Donald Trump setting a date for the signing of the trade deal.

The first trading day of a new decade saw European stocks rising after Trump revealed that a Phase One trade agreement with China would be signed on January 15. The signing ceremony is set to happen in Washington with top Chinese negotiators.

The US president announced the news via Twitter. However, the lack of detail over the scope of the agreement has led to a muted market response.

Investors were also upbeat over news that China has relaxed its monetary policies. According to the country’s central bank, it was reducing its reserve banking requirement ratios. It’s the eighth time Beijing has cut ratios. The move was reportedly a way to help the country’s flagging growth as it will free up to 800 billion yuan or $115 billion.

While China’s economy is showing signs of stabilizing, analysts are saying that there are still tough times ahead for the country and to expect more changes aimed to boost growth in the coming months.

Europe’s primary markets enjoyed gains between 0.4% to 0.8%. Asia also advanced while US futures also showed similar movements. MSCI’s broad index of world shares went up by 0.2%. It is on top of the 3.3% advance it enjoyed in December. The benchmark also gained 24% in 2019.

London’s benchmark FTSE 100 gained 0.4% to 7,575.33 points. It was a welcome change after losing for two consecutive sessions. The FTSE 250 also went up 0.3%.

The Pan-European STOXX advanced 0.6% in early trading. The rally received a boost from the banking and basic resources sector. They led the charge by rising and from insurers and oil producers. The DAX dropped 0.1% to 13,239.51 while the CAC 40 of Paris went up 0.7% to 6,017.69.\

Chinese also shares traded higher today, with its CSI300 index rising as much as 1.86%. It’s the highest the blue-chip index has reached since February 2018. The Hang Seng index gained 1.05% while Taiwan rose by 0.86%. The KOSPI was down 0.85%, though, while Japan’s stock exchange was on a break.

Asia’s gains followed on the heels of a bullish Wall Street run as 2019 ended. Dow Jones futures saw an increase of 0.27%. The Nasdaq Composite went up by 0.3% while the S&P 500 rose 0.29%.