Stock markets mostly bumped upwards Thursday as hopes grew that the European Union could strike a trade deal with the United States, while Tesla shares nosedived on poor earnings results.
Investors have profited in recent weeks from wagers that governments will eventually hammer out pacts with Donald Trump ahead of the US president’s looming August 1 deadline to avoid steeper levies.
Briefing.com analyst Patrick O’Hare said Trump’s Tuesday trade announcement with Japan had raised hopes about further agreements.
“There is underlying enthusiasm for more trade deals being struck before the August 1 deadline,” O’Hare said.
This was boosted further by “optimism surrounding trade talks between the US and EU”, said Joshua Mahony, chief market analyst at Rostro trading group.
On Wall Street, both the S&P 500 and tech-heavy Nasdaq edged higher in the morning’s trading, although the Dow slid lower as investors digested mixed company earnings.
Google parent Alphabet was among the early gainers, rising about three percent after reporting a whopping $28.2 billion in second-quarter profits as it touted its artificial intelligence offerings.
But Tesla fell around nine percent as CEO Elon Musk warned investors of a rough patch for earnings after the electric car maker reported a 16-percent drop in quarterly profits.
A survey of US manufacturers released Thursday showed business confidence in the world’s top economy also deteriorated in July for the second month running.
“Companies cite ongoing concerns over the impact of government policies, notably in terms of both tariffs and cuts to federal spending,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
In Europe, London’s FTSE 100 gained 0.9 percent at the close, lifted by a stream of robust earnings, including from consumer goods group Reckitt, mobile phone giant Vodafone and Lloyds bank.
Paris fell, dragged down by a drop in luxury stocks and disappointing profits from fossil fuel giant TotalEnergies.
Yet most other European stocks markets including Frankfurt rose, as the European Union and Washington appeared close to a deal that would halve a threatened 30-percent levy on EU goods to 15 percent.
A European Commission spokesman said Thursday that he believed a trade deal with the US is “within reach”.
According to multiple diplomats, the deal could waive tariffs on aircraft, lumber, pharmaceutical products and agricultural goods.
The bloc, however, is still forging ahead with contingency plans in case talks fail, with member states approving a 93-billion-euro ($109-billion) package of counter-tariffs on US goods.
Meanwhile, the European Central Bank left interest rates unchanged, as widely expected.
It warned that the economic environment remained “exceptionally uncertain, especially because of trade disputes” as higher US tariffs hang in the balance.
The euro dipped a touch following Thursday’s rate decision, but it did perk up after ECB President Christine Lagarde said the central bank was monitoring the dollar-euro exchange rate but had no target.
The euro has surged almost 14 percent against the dollar since the start of the year, boosted by investors dumping US assets in the face of Trump’s impetuous policymaking and attacks on the US Federal Reserve.
The euro’s appreciation helps contain inflation but could harm European exports and thus slow already sluggish economic growth.
In Asia, stocks advanced with Tokyo adding more than one percent, building on a more than three percent surge Wednesday on the back of the Japan-US trade deal.
Hong Kong and Shanghai also rose.
– Key figures at around 1530 GMT –
New York – Dow: DOWN 0.4 percent at 44,851,07 points
New York – S&P 500: UP 0.3 percent at 6,375.34
New York – Nasdaq Composite: UP 0.3 percent at 21,075.70
London – FTSE 100: UP 0.9 percent at 9,138.37 (close)
Paris – CAC 40: DOWN 0.4 percent at 7,818.28 (close)
Frankfurt – DAX: UP 0.2 percent at 24,295.93 (close)
Tokyo – Nikkei 225: UP 1.6 percent at 41,826.34 (close)
Hong Kong – Hang Seng Index: UP 0.5 percent at 25,667.18 (close)
Shanghai – Composite: UP 0.7 percent at 3,605.73 (close)
Dollar/yen: UP at 146.79 yen from 146.47 yen on Wednesday
Euro/dollar: DOWN at $1.1774 from $1.1777
Pound/dollar: DOWN at $1.3537 from $1.3579
Euro/pound: UP at 86.98 pence from 86.68 pence
West Texas Intermediate: UP 1.3 percent at $66.09 per barrel
Brent North Sea Crude: UP 1.1 percent at $69.26 per barrel
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