World shares near one-week high on robust US earnings

London — World shares held near one-week highs on Wednesday, supported by robust US earnings and expectations of additional stimulus from Beijing that could temper the impact of China’s simmering trade dispute with the US.

US equities now stand less than 0.5% off record highs hit in January, testifying to the strength of the world’s biggest economy and corporate sector, which has seen average earnings grow 23% in the second quarter.

The picture in the rest of the world is less rosy, given slower economic momentum and the greater vulnerability of other big economies — from China to Germany — to US trade levies. Washington is preparing to start collecting tariffs on an additional $16bn in Chinese goods. But for now many markets, especially in Asia, are supported by the US tech rally that recently saw iPhone maker Apple become the world’s first $1-trillion company.

MSCI’s index of stocks from 47 countries was marginally higher while Asian equities rose 0.3%, led by tech-heavy Taiwan. Japan’s Nikkei ticked up 0.4%. “Everyone is just focusing on US earnings … and feeling the US market will remain robust despite trade uncertainties, and that’s the main driver right now,” said Christophe Barraud, a strategist at Paris-based brokerage Market Securities.

Barraud said autumn could bring a reality check in the form of slower US growth indicators, Italian politics, Britain’s Brexit negotiations with the EU, US mid-term elections and — above all — the risk of trade-war escalation.