European stocks moved higher on Wednesday as tensions between the U.S. and China eased and the yuan held steady.
The Stoxx 600 SXXP, +1.05% rose 0.8%, the FTSE 100 UKX, +0.83% 0.7% and the CAC PX1, +1.38% 1.1%.
The DAX DAX, +1.41%, buoyed by mergers and acquisitions in the German chemicals sector, climbed 1.2%.
What’s moving the markets?
Heightened tensions between the U.S. and China, which sent markets spiraling earlier this week, appear to have cooled.
Despite the trade war threatening to become a currency war, with China allowing the yuan to fall below the key level of 7 to the dollar, talks between the world’s two largest economies are still scheduled to go ahead next month.
China’s central bank set the midpoint reference for the yuan at 6.9996 on Wednesday, slightly lower than expected.
In the absence of further escalation and a stable yuan, European stocks made gains.
Christian Gattiker, head of research at Julius Baer, the Swiss private bank, said investors would have to wait for a supportive policy response to lift stocks significantly.
He said: “The trouble for now is that policy response will take quite some time.
“The next big central bank platform is two weeks from now at Jackson Hole, and U.S.-China trade talks will only resume in September.”
Bond yields continued to drop, with the German bund hitting a record low, while gold prices rose to six-year highs.
European banks moved lower as Commerzbank, UniCredit and ABN Amro all raised concerns over lower interest rates.
Which stocks are active?
UniCredit UCG, -3.95% slid 2.8% after the Italian bank cut its revenue guidance for the year due to an environment of low interest rates. The bank’s second quarter net profit rose 81% to €1.85 billion ($2.07 billion) following its sale of online broker FinecoBank.
Glencore GLEN, -2.03% reported a 32% drop in core profit as falling copper prices hit the commodities producer and trader. The Anglo-Swiss miner also revealed it would halt production at the world’s largest cobalt mine. The economic viability of Mutanda, in the DRC has been reduced due to lower cobalt prices.
Bayer BAYN, +6.61% and Lanxess LXS, +3.11% both made considerable gains after agreeing to sell their stakes in chemical site operator Currenta to Macquarie Infrastructure and Real Assets for €3.5 billion. Bayer, which held a 60% stake in Currenta, jumped 6% in early trading.
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