Stock markets diverge, investors guarded over trade deals

LONDON: Stock markets traded mixed on Wednesday with investors moving cautiously as they gauge possible headwinds from the latest trade deal developments.

New York on Tuesday provided another record lead on lingering optimism after the United States and Mexico agreed on a revised free-trade deal and Canada began talks that could see it join them.

However, while the news was seen as a much-needed boost after US President Donald Trump threatened to tear up the North American Free Trade Agreement when he took office, concerns remain about his tariffs row with China that has rattled markets for months.

Washington could soon also impose levies on $200 billion of Chinese goods, which would come on top of the $50 billion already being hit.

"Latest news headlines seem to be easing market worries over a trade war for now," Mizuho Securities said in a note to clients.

"But it may be a bit too early to become fully optimistic, given fears that the Trump administration may impose additional tariffs on $200 billion worth of Chinese goods as early as next month and US-China summit talks are expected after the US mid-term elections in November," it added.

David Ader, chief market strategist at Informa Financial Intelligence, said stocks were in a good spot despite the caution on trading floors.

"I tend to be more pessimistic that we are going to come away with trade deals that are going to make everybody satisfied," he told Bloomberg TV, "but we are trading headlines, we are trading the sensitivity to those headlines, so for the moment it looks good".

On currency markets the Mexican peso gave up all the gains made on the back of the trade deal news and was down Wednesday as observers questioned the agreement.

The pound meanwhile extended losses after British Prime Minister Theresa May seemed to hint she was open to a possible no-deal Brexit, saying leaving the EU without an agreement would not be a disaster.

On the corporate front, Aston Martin said it plans to float one quarter of the British company on the London stock market, as demand rises worldwide for the luxury brand's cars favoured by fictional spy James Bond.

Full details of the initial public offering will be published on September 20, Aston Martin said in a statement, with reports noting that the company could be valued up to £5.0 billion ($6.4 billion, 5.5 billion euros).

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.5 percent at 7,582.27 points

Frankfurt - DAX 30: FLAT at 12,525.22

Paris - CAC 40: FLAT at 5,487.12

EURO STOXX 50: DOWN 0.1 percent at 3,444.99

Tokyo - Nikkei 225: UP 0.2 percent at 22,848.22 (close)

Hong Kong - Hang Seng: UP 0.2 percent at 28,416.44 (close)

Shanghai - Composite: DOWN 0.3 percent at 2,769.29 (close)

New York - Dow Jones: UP 0.1 percent at 26,064.02 (close)

Euro/dollar: DOWN at $1.1657 from $1.1698 at 2100 GMT

Pound/dollar: DOWN at $1.2884 from $1.2896

Dollar/yen: UP at 111.20 yen from 111.07 yen

Oil - Brent Crude: UP 18 cents at $76.13 per barrel

Oil - West Texas Intermediate: UP 33 cents at $68.86