Metals stocks shine on optimism over US-China trade deal1 min read . Updated: 04 Nov 2019, 03:30 PM IST
- JSW Steel was the top gainer among Nifty 50 constituents, climbing up nearly 6%
- Tata Steel and Vedanta rose 4.5% and 3.5%, respectively
Shares of Indian metal and mining companies—Tata Steel Ltd, JSW Steel Ltd, Vedanta Ltd and Hindalco Industries Ltd—surged on Monday due to optimism over US-China trade deal. While JSW Steel was the top gainer among Nifty 50 constituents, climbing up nearly 6%, Tata Steel and Vedanta rose 4.5% and 3.5% respectively.
According to news reports, US commerce secretary Wilbur Ross on Sunday said he was “quite optimistic" that challenges related to the first phase of the US-China trade talks will be resolved soon. Ross also said leaders of both the nations are still scheduled to meet later this month.
US president Donald Trump and Chinese leader Xi Jinping are set to meet in November, Ross said, adding that the venue of the meeting was a “work in progress". The clarification comes as the Chilean government last week cancelled the Asia-Pacific Economic Cooperation, or APEC, summit amid political unrest in the country. The summit was scheduled for 16-17 November in Santiago.
The US is the world’s largest steel importer, importing more than 25 million tonne of the alloy. Though India is a minor exporter of steel to the US, a higher tariff is likely to have affected 50% of total imports to the US, triggering a global glut and slump in prices.
In the case of China, the largest producer and exporter of steel in the world, investors fear that the Asian nation would end up having excess capacity that would need a new market.
The US and China are the world’s largest economies and hence also the largest consumers. A protracted trade war between the two have already dented outlook for most commodities, including metals, and hence any likelihood of a breakthrough in talks is a welcome sign.
In July 2018, tensions between Washington and Beijing came to the fore when Trump imposed sweeping tariffs on China for its alleged unfair trade practices. The US so far has slapped tariffs on $550 billion worth of Chinese products. Beijing has retaliated with tariffs on $185 billion worth of US goods.
Both sides have also threatened qualitative measures that affect US businesses operating in China. Leaders of the two nations, in various attempts, have tried negotiating and reaching a common ground but have so far failed.