Markets

European stocks close mixed ahead of US-China trade deal signing

Key Points
  • A Chinese delegation is in Washington to ink the long-awaited interim agreement, but U.S. Treasury Secretary Steven Mnuchin said on Tuesday that the U.S. would maintain tariffs on Chinese goods until the completion of phase two.
  • German full year GDP (gross domestic product) growth figures for 2019 are due Wednesday morning, providing a vital insight into the state of Europe's largest economy.

European stocks closed mixed on Wednesday as investors awaited the signing of the so-called "phase one" trade deal between the U.S. and China, with optimism slightly dented by comments from the U.S. Treasury.

The pan-European Stoxx 600 closed provisionally barely moved, with autos falling 1.7% to lead losses while utilities stocks bucked the trend to gain 1.3%.

A Chinese delegation is in Washington to ink the long-awaited interim agreement, but U.S. Treasury Secretary Steven Mnuchin said on Tuesday that the U.S. would maintain tariffs on Chinese goods until the completion of phase two.

Mnuchin also claimed that documents due to be released later on Wednesday will show that the "phase one" deal is fully enforceable and includes a vow from Beijing to refrain from currency manipulation.

On Wall Street, stocks rose in anticipation of the deal and as the corporate earnings season picked up steam. The Dow Jones Industrial Average traded 160 points higher, while the S&P 500 and Nasdaq indexes were also positive.

Back in Europe, the U.K., France and Germany have all formally accused Iran of violating its 2015 nuclear deal, a move which could pave the way for a re-imposition of U.N. sanctions lifted as part of the agreement.

German full year GDP (gross domestic product) growth figures published Wednesday morning showed that Europe's largest economy grew by 0.6% in 2019, its weakest expansion rate for six years, as export-dependent manufacturers face ongoing headwinds from trade disputes and weak overseas demand.

Meanwhile U.K. inflation rose at its weakest rate in three years in December, climbing at an annual rate of 1.3% compared to an expected 1.5%. The numbers exerted some downward pressure on sterling and raised expectations for a rate cut from the Bank of England (BOE) later this month.

Stocks on the move

ASMI shares jumped almost 9% after the Dutch semiconductor company reported stronger-than-expected fourth-quarter sales and orders.

At the other end of the European benchmark, shares of London-listed Tullow Oil plunged nearly 16% as the firm said it would take a $1.5 billion writedown. The announcement comes after the company cut its oil price forecast.