European stocks rebounded on Thursday on news that Beijing and Washington will hold trade talks, while the Turkish
lira rose after Qatar offered to invest $15bn in Turkey. Asian indices fell Wednesday on concerns over Turkey’s crisis, but losses were capped by hopes of an end to the tit-for-tat trade war between China and the United States.
Frankfurt, London and Paris shares bounced higher, having shed more than 1.5% the previous day on Turkey fears and Chinese growth concerns. “Investor risk sentiment has received a boost on two fronts,” noted OANDA analyst Dean
Popplewell. “Reports that China has accepted a US invitation to trade talks in late August and news that Qatar has pledged to invest $15bn in Turkey are helping market risk sentiment and pressuring the dollar.”
Emerging market currencies staged a modest recovery after a tumultuous week for the Turkish lira, which plumbed record lows against the dollar. The lira’s plunge – ongoing for weeks – turned into a rout last Friday when US
President Donald Trump tweeted that his administration was doubling aluminium and steel tariffs for Turkey.
Trump’s decision was made amid a bitter row over Ankara’s detention of an American pastor. But President Recep Tayyip Erdogan said Turkey was facing an “economic attack”. Wall Street wobbled on Wednesday as traders fretted over possible global contagion from Turkey. However, the prospect of US-China talks “has prompted a rebound in the Chinese renminbi from its recent lows, while the continued recovery in the Turkish lira has alleviated short term concerns of a collapse in the currency”, noted CMC Markets analyst Michael Hewson. China’s Vice Commerce Minister Wang Shouwen, the deputy representative on international trade negotiations, will meet senior US treasury official David Malpass at Washington’s invitation, the ministry in Beijing said in a statement. Traders saw a glimmer of hope of a detente in the ongoing trade battle that has seen the two sides hit each other with reciprocal tariffs
on goods so far worth $34bn.