Global markets rally on trade talk optimism, strong Chinese export data
The upbeat mood pushed investors away from safe-haven assets towards toward riskier currencies
London — Progress in the US-China trade talks helped propel world stock markets to a six-month high on Friday and steered investors away from save havens such as the Japanese yen.
In early European trades, the pan-region Euro Stoxx 50 futures, German DAX futures and London’s FTSE futures each rose about 0.1%.
US Treasury secretary Steven Mnuchin said he hoped US-China trade talks were approaching a final lap.
That, combined with strong Chinese export and euro zone industrial production data on Friday, has lifted global equities, bund yields and the euro.
The US Federal Reserve pausing its rate-tightening efforts and Britain delaying its exit from the EU has also helped lift the mood in equity markets.
“It seems like bullish sentiment has decent grip for now and everyone is focused on the year to date performance of the equity markets,” said Naeem Aslam, chief market analyst at TF Global Markets in London.
MSCI’s gauge of stocks across the globe gained 0.5%. The index is up nearly 15% for the year.
Investors this week will be scrutinising data — including Germany’s ZEW survey and Chinese GDP due on Wednesday — for signs of whether a global economic slowdown is turning around.
The optimism over progress in US-China trade negotiations pushed investors away from safe-haven assets such as the Swiss franc and toward riskier currencies.
The yen dropped towards its 2019 low on Monday and the Swiss franc hit its weakest in nearly a month.
The dollar also weakened slightly, allowing the euro to cement gains above $1.13.
Further spurring risk appetite, Reuters exclusively reported on Monday that US negotiators have tempered demands that China curb industrial subsidies as a condition for a trade deal after strong resistance from Beijing.
Equities and other risky assets have been volatile this year over worries of a slowdown in the US and other major economies.
The European Central Bank maintained its loose policy stance on Wednesday, highlighting threats to global growth.
“The market is bearish Europe. Not enough growth, not enough inflation, too much fiscal inaction and too much ECB dithering for some people’s taste,” said Société Générale analyst Kit Juckes.
In commodities, oil provided big milestones last week, with Brent breaking through the $70 threshold and the US benchmark posting six straight weeks of gains for the first time since early 2016.
Brent crude oil futures was last off 23c at $71.32 while crude futures, the US benchmark, eased 33c to $63.56.