Stocks rise on China-US hopes, gold and silver slump

Most stock markets extended gains Tuesday on further signs that China-US trade tensions were easing and as investors looked to corporate earnings.

Tokyo hit another record as Japan swore in new prime minister Sanae Takaichi and brought an end to a period of political uncertainty.

But the price of gold tumbled more than five percent on profit-taking after recent record highs for the precious metal, seen as a safe haven investment. Silver tumbled more than eight percent.

On Wall Street both the Dow and S&P 500 climbed, while the tech-heavy Nasdaq dipped as more companies reported their earnings.

“The overarching point this morning is that the earnings news for the September quarter continues to be better than expected, and, most importantly, the guidance has been generally reassuring,” said Briefing.com analyst Patrick O’Hare.

“The fact that the market isn’t as expressive about those points this morning as one might expect is due mostly to that reality having been priced in to a large degree already.”

Shares in General Motors raced more than 15 percent higher after the automaker reported better-than-expected profits and boosted some full-year projections based on lower tariff costs.

In Europe, the Paris stock exchange set fresh intra-day and closing records, pulled higher by a nearly 20-percent gain for financial services firm Edenred after it reported better-than-expected sales.

Asia markets also posted gains, with Hong Kong and Shanghai closing up more than one percent.

“The focus is now on US interest rate cuts, the new corporate reporting season, and US-China trade talks,” said Russ Mould, investment director at AJ Bell.

Investors will look to US inflation figures due Friday for further signals about the pace of the rate cuts.

Investors were back in a buying mood after last week’s ructions sparked by Donald Trump’s threat to hammer China with 100-percent tariffs over its latest rare earth export controls.

The US president has since struck a more conciliatory tone ahead of a meeting with Chinese counterpart Xi Jinping at the APEC summit in South Korea.

He said he wanted a “fair” trade deal between the superpowers and praised his relationship with Xi.

Trump also played down fears of a Chinese invasion of Taiwan, saying: “I think we’ll be just fine with China. China doesn’t want to do that.”

The remarks followed other positive comments at the weekend and helped push Wall Street higher on Monday, as the tech-led rally resumed.

In Japan, the yen weakened after Takaichi was appointed prime minister, which raised expectations for a slower pace of interest rate rises.

“Takaichi is expected to cut taxes and boost defence spending, she is also not a fan of interest rate hikes,” said Kathleen Brooks, research director at XTB trading group.

Meanwhile gold and silver pulled back.

“The drop was always going to come, and some would argue what took it so long,” City Index and FOREX.com analyst Fawad Razaqzada told AFP.

“Multiple factors have come together all at once — from hopes that the US and China will agree to extend the trade truce, to a rebound in US dollar and an overall positive risk appetite,” he said.

The pound fell against the dollar on official data showing UK public borrowing reached a five-year high in September.