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Global markets breeze higher on growth outlook
LONDON, Sept 22, 2018 (BSS/AFP) – Global stock markets rose Friday as
optimism on the US economic outlook outweighed lingering trade war worries,
dealers said.
European equities were all solidly higher at the close, with London
outshining its peers thanks to a slipping pound as Brexit talks appeared to
be stalling.
On Wall Street the Dow index was also firmer approaching midday in New
York, building on the previous day’s all-time pinnacles, with investors
concluding that trade war concerns were overblown as the world’s biggest
economy powers ahead.
“Investors continue to brush off the ongoing trade dispute between the US
and China,” said Craig Erlam, an analyst at Oanda.
A “lack of escalation” in trade spats combined with optimism on the
American economy turned out to be a winning combination, added analysts at
the Charles Schwab brokerage.
“Trade concerns remain contained, while the domestic economic front
continues to paint a solid picture,” they said.
An unsuccessful Brexit summit in Salzburg, ending in “humiliation” for the
British prime minister according to some, weighed on the pound from the start
of business, but that in turn helped London’s benchmark FTSE 100 index to
post a whopping 1.7-percent gain at the finish.
The British currency then weakened further after Prime Minister Theresa
May said that Brexit talks were “at an impasse” and that the European Union’s
response to British plans was “not acceptable”.
– ‘Brave’ to buy pound –
It was a “brave” investor who dared to buy sterling after May’s comments,
tweeted Viraj Patel, global macro strategist at ING.
“But (the) long game is one of greater upside than downside if a deal is
ultimately reached,” he said.
Oanda’s Erlam, also in a tweet, said that May had said nothing beyond
trying to “‘prove’ she’s playing hardball with the EU. Nothing, as ever, has
changed”.
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But David Madden, a market analyst with CMC Markets UK, saw more substance
in May’s performance, saying she “made it clear she is literally willing to
walk away from (negotiations) if the EU’s offer doesn’t measure up”.
Asian equities enjoyed another day of strong buying to finish the week
with a flourish.
Shanghai surged 2.5 percent after the Chinese government unveiled a
stimulus packaged aimed at lifting domestic consumption.
“For the moment Asian stocks have shrugged off trade war concerns with the
focus shifting to China’s new stimulus package which is expected to boost
consumption and cut import tariffs from other countries,” said City Index
senior analyst Fiona Cincotta.
“Make no mistake, the US economy is running on all cylinders,” said
Stephen Innes, head of Asia-Pacific trade at Oanda.
“Robust growth, soaring employment and rising capital investments,
suggesting the healthy US economy is more than just a short-term knock-on
effect from the intravenous elixir of easy credit and fiscal glucose.”
– EM currencies bounce –
The upbeat mood on trading floors was being felt across the board, with
embattled emerging market currencies seeing a recovery.
Those currencies — beaten down in recent weeks by fears of contagion from
crises in Turkey, South Africa and Argentina — were also basking in the
optimism as traders sought out higher-risk assets.
South Korea’s won rose 0.4 percent, while the Indonesian rupiah added 0.3
percent and the Indian rupee was up 0.7 percent, pulling it away from recent
record lows. South Africa’s rand and the Turkish lira jumped more than one
percent.
China’s yuan extended gains after Premier Li Keqiang said this week that
Beijing would not devalue the unit to offset the impact of Donald Trump’s
import tariffs.
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