Global shares push to 22-month high

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World shares touched their highest in nearly two years on Tuesday as investors maintained bets that the United States and China would reach a deal to end the trade war.

The world’s two largest economies are in talks on an initial deal to end an 18-month trade dispute that has damaged supply chains and upset global markets, with Washington due to impose a new round of tariffs on Chinese goods from December 15.

A lack of clear news on the progress of talks has not deterred investors emboldened by a growing sense that risks of a recession, a specter through the year, have receded.

Looser monetary policy from major central banks like China has also helped bolster expectations for equities.

The MSCI world equity index .MIWD00000PUS, which tracks shares in 47 countries, gained 0.1% to touch its highest since January last year.

European shares also moved up, with the broad Euro STOXX 600 adding 0.4% to move to its highest since July 2015. Indexes in Frankfurt .GDAXI and London .FTSE gained 0.4% and 0.5% respectively.

Wall Street futures ESc1 indicated a positive start, too, adding 0.2%.

Investors said assumptions that an initial trade deal would be reached had outweighed any creeping doubts on progress in talks that stemmed from a lack of clear news, with a growing sense of positive economic fundamentals ahead.

“Consensus is assuming that there will be a cyclical upturn. It’s like the market lowered its guard on the big risk metrics — and that has triggered a reweighting of funds from bonds to equities,” Stéphane Barbier de la Serre, a strategist at Makor Capital Markets.

Hopes that Beijing will deliver some economic stimulus in addition to Monday’s surprise cut to a closely watched lending rate provided a boost to sentiment in Asian markets.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6%, with Shanghai blue chips .CSI300 gaining 1% and Hong Kong’s Hang Seng .HSI up 1.4%.

On the trade front, CNBC had overnight reported the mood in Beijing was pessimistic about prospects of sealing a trade agreement with the United States, buffeting the dollar.

But signs that suggested growing detente between the sides clouded the picture: a new extension granted by Washington to let U.S. companies keep doing business with Chinese telecoms giant Huawei suggested a possible olive branch.

That lack of clarity did unnerve some investors.

“The longer we go on, the more concerns will arise. The reality is the clock is ticking,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney.

Peace PIAK