Global stocks rally on Trump-Xi breakthrough

Traders gather at the New York Stock Exchange. US stocks on Monday were solidly higher, with the DJIA index gaining 250 points at the opening bell. (AP/File)
Updated 02 July 2019

Global stocks rally on Trump-Xi breakthrough

  • US president’s historic visit to North Korea propels the dollar
  • China meanwhile pledges to buy more US agricultural machinery

LONDON: Stock markets surged Monday after US President Donald Trump and Chinese counterpart Xi Jinping agreed on the sidelines of the G20 summit to restart trade talks, reviving hopes of an end to their tariff war.

Trump’s historic visit to North Korea also at the weekend, where he met leader Kim Jong Un, further soothed geopolitical concerns and propelled the dollar, as investors shunned havens, notably gold.

Oil prices also rallied after OPEC and its oil producing allies appeared firmly on course to extend their oil output caps.

“European markets are uniformly higher, particularly the heavily China-exposed DAX” index in Frankfurt, noted Fiona Cincotta, a senior market analyst at City Index trading group.

German stocks were supported also by official data showing unemployment in Germany held steady in June.

US stocks were also solidly higher, with the DJIA index gaining 250 points at the opening bell.

“US stocks are nicely higher in early action to begin the third quarter, with global markets rallying on the weekend’s G-20 summit in Japan that delivered a trade truce between the US and China that agreed to hold off on implementing further tariffs,” analysts at Charles Schwab said.

Trump said negotiations to resolve the standoff between the US and China — the world’s two biggest economies — were “back on track,” adding that he would hold off imposing threatened new levies on Chinese goods.

Trump also signalled a softer position on Chinese telecom giant Huawei, a major bone of contention in the row, by saying US companies could sell equipment “where there’s no great national security problem.”

China meanwhile pledged to buy more US agricultural machinery.

The news was welcome after Trump sparked volatility on markets in early May with his shock decision to hit China with new tariffs and halt talks that had seemed to be nearing a positive end.

“Investors heaved a massive, but exhausted, sigh of relief that both the US and China opted to push the reset button and restart trade negotiations amidst other pleasantries — now we’ll have to see whether it all sticks,” said Stephen Innes at Vanguard Markets.

Elsewhere on Monday, the WTI oil price jumped back above $60 per barrel after OPEC giant Saudi Arabia and non-cartel producer Russia said they would extend caps on crude output.

“Everyone supported the proposition to extend for nine months the limits agreed in December,” Russian Energy Minister Alexander Novak told reporters after a gathering of oil ministers and before the cartel’s main meeting later Monday.

WTI, the New York benchmark, climbed above $60 for the first time since the end of May, before easing back a little.


Saudi Arabia must plan carefully for ‘super cities,’ says strategist

Updated 22 November 2019

Saudi Arabia must plan carefully for ‘super cities,’ says strategist

  • Author and global strategist Parag Khanna held up Dubai as an example of a city that was making major progress in the drive to ”smart status”
  • In his recent book “Connectography,” he said that research by consultants McKinsey found that the minimum size for a “super city” was 4 million inhabitants

BEIJING: Saudi Arabia has the potential to develop “super cities” in the Kingdom, but must pay careful attention to the economic fundamentals behind such projects, according to global strategist and author Parag Khanna.

Speaking at the Bloomberg New Economy Forum in Beijing, Khanna told Arab News: “When you are building a city from scratch, you have to be certain of the plan. What is the economic master plan? How self-sustaining will the city be? What will people living there do for a living?”

The Kingdom is planning the mega-city NEOM on the northwest coast, as well as several other developments, under the Vision 2030 strategy to transform the economy.

Khanna, author of the recent book “Connectography,” said that research by consultants McKinsey found that the minimum size for a “super city” was 4 million inhabitants. In Saudi Arabia, only Riyadh had surpassed that figure in a single conurbation.

“The way to make up the difference is to create “smart” cities that will increase connectivity and living standards,” Khanna said. He held up Dubai as an example of a city that was making major progress in the drive to ”smart status,” adding “for the first time in a long time, other Arab cities are looking at another Arab city as a model of the kind of city they would like to live in, rather than a city outside the Arab world.”

Khanna said that he did not know enough about plans for NEOM and other Saudi projects to know whether they would be successful in reaching “super city” status. “I’d have to kick the tires,” he said, pointing to developments along the Red Sea coast like the King Abdullah Economic City and the regeneration of Riyadh as other potentially successful urban projects. 

Super cities are conurbations that drive economic growth and improvement in living standards. “Urbanization has been the single greatest factor in improving the human condition,” Khanna said.

The Arab world and South America have historically been urban dominated, but the drive to city building recently has gathered pace in China and India.