LONDON -- Global stock markets continued to recover ground Wednesday after China's decision to stabilize its currency eased some tensions around the trade war with the U.S. European stocks were doing particularly well, having failed to rebound the previous day.
Many global indexes endured their worst day of the year on Monday after China allowed its currency to depreciate against the dollar in an apparent response to President Donald Trump's latest tariff announcement on Chinese goods. The mood in markets has improved after Beijing refrained from any further retaliatory measures. Whether it lasts is uncertain.
"It's too early to even try and associate this with any form of optimism given the events of the last week," said Craig Erlam, senior market analyst at OANDA.
"There's been a lot to digest and I wonder whether investors are simply taking a step back and doing just that."
In Europe, France's CAC 40 rose 1.3% to 5,301 while Germany's DAX advanced 1.2% to 11,706. Britain's FTSE 100 was up 0.8% at 7,225.
Whether Europe ends the day higher could hinge on the performance of Wall Street, where U.S. stocks have regained their footing following Monday's drop. Ahead of Wednesday's opening bell, Dow futures and the broader S&P 500 futures were flat.
Longer term, the outlook for markets will depend on how the trade conflict between the United States and China plays out. Global investors have grown nervous lately about the possible impact that the trade war could have on the economy and corporate profits.
But China's decision to allow its currency to stabilize Tuesday suggests Beijing might hold off from aggressively allowing the yuan to weaken as a way to respond to U.S. tariffs on Chinese goods.
"Market participants are growing increasingly fretful that the prospect of a U.S.-China compromise is at risk of being snuffed out completely," said Han Tan, Market Analyst at FXTM.
ASIA'S DAY: The mood was subdued earlier in Asia. Japan's benchmark Nikkei 225 lost 0.3% to finish at 20,516.56. Australia's S&P/ASX 200 added 0.6% to 6,519.50. South Korea' Kospi slipped 0.4% to 1,909.71. Hong Kong's Hang Seng edged up nearly 0.1% to 25,997.03, while the Shanghai Composite fell 0.3% to 2,768.68.
ENERGY: Benchmark crude oil lost 41 cents to $53.22 a barrel while Brent crude oil, the international standard, slipped 42 cents to $58.52 a barrel.
CURRENCIES: The euro was flat at $1.1187 while the dollar fell 0.6% to 105.82 yen.