Global Stock Markets Rise In 2020 Thanks To Trade Optimism, Chinese Economic Stimulus – Forbes

Topline: Global stocks rallied to begin the new year on Thursday, ensuring that the gains from late 2019 continue for now, thanks to renewed optimism over global trade and Chinese economic stimulus.

• China’s central bank announced overnight that it was lowering the amount of cash that banks are required to hold—the eighth time doing so since 2018, which will free up almost $115 billion for lending to boost the Chinese economy.
• That helped the stock markets in Shanghai and Hong Kong rise on Thursday, by nearly 1.2% and 1.3%, respectively.
• The Chinese stimulus was also a boost for European firms who export to China: Stocks were broadly higher—also thanks to better-than-expected manufacturing data—with the Stoxx Europe 600 and the U.K.’s FTSE 100 both rising 1%, while the French CAC 40 rose 1.3%.
• With China taking action to follow through on its promises to boost economic growth in 2020, that’s also combining with renewed global trade optimism—especially between the U.S. and China—to kick-start global stock markets in the new year.
• In a recent tweet, U.S. President Donald Trump also confirmed that the long-anticipated phase one trade pact with China would be officially signed on January 15, 2020, and that he would later travel to Beijing to start a new round of negotiations.
• The U.S. stock market also opened on a high, with the S&P 500 and Dow futures each rising by around 0.60% in pre-market trading.

Tangent: Amid political tensions with the U.K.—especially over Hong Kong—China has temporarily blocked cross-border listings between the Shanghai and London stock exchanges, according to an exclusive report from Reuters.

What to watch for: If global stocks can keep their momentum. Diffusing trade tensions with China should relieve international tariff pressures and give markets a boost to start the year. China’s central bank stimulus was another positive for global investors, as it could bolster the country’s slowing economy. In the U.S., where the stock market has continued to hit new record highs in recent months, valuations have risen to expensive levels, meaning that corporate earnings will need to deliver in order to keep the rally going in 2020, according to CNBC.