Global stocks up on strong earnings and easing of transatlantic trade tension

London — Global stocks rose on Friday as strong company earnings reports and an easing of transatlantic trade tensions on an agreement between the US and Europe this week to try to cut trade barriers boosted investor confidence.

The MSCI All-Country World Index, which tracks shares in 47 countries, was up 0.1% after the start of European trading. It was set for a sixth straight session of gains, a run not seen since February, and was set for its fourth weekly gain on the trot.

European stocks edged up in early trade and were set to end the week at six-week highs, helped by easing fears over US tariffs and good company results.

Shares rose in consumer goods company Reckitt Benckiser, construction groups Saint Gobain and Vinci, and bank BBVA following well-received results, lifting the STOXX 600 up 0.1%. European vehicle maker stocks added to Thursday’s gains.

Trade tensions had not disappeared altogether from investors radars, however. Chinese shares under-performed an uptick in Asian shares, with the main Shanghai index in the red for most of the day. Traders attributed this to a still unresolved stand-off between the US and China on trade.

“To see the way markets reacted early yesterday, and the DAX in particular, which closed at a five-week high, it was almost as if the EU and the US were best buddies again,” said Michael Hewson, chief markets analyst at CMC Markets in London. “Nothing could be further from the truth, and while the prospect of tariffs on European cars has diminished, it hasn’t gone away completely, which means inevitably the market shifts its attention elsewhere. That elsewhere concerns what could happen next with respect to China, and the prospect of an escalation there.”

So far this month, MSCI China A shares have fallen 2.6%, taking the biggest hit from US President Donald Trump’s threats on tariffs and other issues among major markets, compared to 3.3% gains in the MSCI All-Country World Index.

The Chinese yuan eased, on course to mark its seventh week of losses, although the losses were cushioned by Chinese state banks’ swapping of dollars for yuan in the forward market. Traders suspected they had also been selling spot dollars.

Borrowing costs in the eurozone’s biggest economy, Germany, held below six-week highs, a day after the European Central Bank’s (ECB) president backed market expectations for a rise in interest rates late next year.

Most 10-year bond yields in the bloc were steady ahead of second quarter US economic growth data due at 12.30pm GMT that many economists expect to show a strong reading. The 10-year US treasuries yield edged up to 2.9880%, its highest level in one-and-a-half months, on receding worries about trade tensions.

Japan’s 10-year government bond yield slipped off a one-year high after the Bank of Japan (BOJ) conducted special, unlimited buying for the second time this week. Most market players expect the central bank’s meeting on Monday to stop short of making immediate policy changes and to say, instead, that they will study ways to reduce the side-effects of the prolonged easing, such as hits to banks’ profits.

In currencies, the dollar slipped 0.1% to ¥111.13 as the yen got a lift from a rise in Japanese bond yields. Against a basket of currencies, the dollar was up 0.1% at 94.845, hitting a five-day high.

The euro traded down 0.1% at $1.1630, having fallen 0.73% on Thursday after the ECB signaled no change in its timetable to move away from ultra low rates or end its bond purchase programme.

“There was a dovish spin relative to what one could have expected, given a recent source-based story that some members of the governing council were not happy with the market pricing on rates,” said Christoph Rieger, head of rates at Commerzbank.

In commodities, oil prices edged lower in quiet trading after three days of gains, but took support from Saudi Arabia halting crude transport through a key shipping lane and falling US inventories. Brent crude futures traded down 0.5% at $74.17 a barrel, having gained 2.0% so far this week.

Spot gold was down 0.1% at $1,221.03 an ounce as of 8.24am GMT. Gold was, however, on track for its third straight weekly decline.

Copper edged up, again boosted by receding trade tensions. It is on course to gain 2.4% on the London Metal Exchange and 3.7% on the Shanghai Futures Exchange this week, which would mark its first weekly rise in seven on both bourses after fears of a global trade war dragged prices down.

Reuters