Picture: REUTERS
Picture: REUTERS

London — World share markets roared higher on Friday as hopes built that the US and China are starting to repair their badly damaged trade relations.

The signals triggered a global surge in risk appetite that lifted metals and swathes of trade-sensitive currencies and bond markets, but it was equities that saw the most explosive action.

A jubilant Asian session, that included 2.5% to 4% percent leaps for most of region’s big bourses, put the world’s main emerging-market index up 3% and on course for its best day and week since early 2016.

Europe was overjoyed too. Germany’s export-heavy DAX 30 jumped 1.5% in its best start since July, while Wall Street futures were also up almost 1% ahead of the monthly installment of non-farm payrolls jobs data.

“When Trump wants to bump the market ahead of the mid-terms the market likes it,” Saxo Bank’s head of forex strategy John Hardy said, referring to next week’s mid-term US elections.

Hardy said while it might just be “political theatre” from Trump for now, the real test would come when he and China’s President Xi Jinping meet at a summit of world leaders later this month in Argentina.

The other key focus, meanwhile, is if US earnings numbers are strong later and whether that then sends 10- and 30-year US bond yields punching up towards 3.5%. Europe’s bond yields  were already on the rise and a Reuters poll shows economists expect a 190,000 rise in US jobs and see hourly earnings increasing 0.2% having climbed 0.3% in September.

These numbers will follow data this week that has revealed slowing factory growth around the world, but for the day, at least, those worries are being soothed by the brighter US-China mood.

In currency markets, the hopes saw the dollar dip to a week-low though it held its ground against the safe-haven yen at ¥113.00.  China’s yuan strengthened to a high of 6.9092 to the dollar in onshore markets and also firmed in offshore trade, pulling away from the sensitive seven level.

The euro also edged up 0.15% to $1.1426 while the Australian dollar gained 0.5% to $0.7240 and sterling made ground again to $1.30 on hopes that London is closing in on transitional Brexit deal. If it doesn’t slip it will be the second best week of the year for the pound. Thursday was its best day of the year.

“Were it not for Brexit uncertainty, the Bank of England (BoE) would probably have laid the groundwork[(at its meeting on Thursday] for its next rate hike,” BNP Paribas analysts said in a note.

Strong metals

Metals led the charge in the commodity markets on the hopes that a trade deal will prevent China’s resource-hungry economy faltering.

Three-month copper on the London Metal Exchange climbed as much as 2.5% to $6,240.50 a tonne, its highest in a week.

Other base metals were up across the board too, with zinc rising 1.8%, nickel climbing 1.7%, lead up 1.3% and aluminum gaining 0.9%.

Oil prices were less energetic but had managed to reverse early Asian losses, with US crude last at $63.63 a barrel and Brent crude a touch higher at $72.99.