Global Markets: Shares Rise Amid China-US Trade Hopes and Dollar Weakness
Global stock markets rally as investors react positively to signs of progress in US-China trade negotiations, while the dollar remains weak.
PARIS: Global shares witnessed a notable surge on Friday, buoyed by optimism over developments in US-China trade talks.
This positive sentiment was further reinforced by a temporary ceasefire between Iran and Israel, which has contributed to heightened expectations of imminent US rate cuts.
Additionally, a recent agreement between the US and China regarding rare earth shipments has been interpreted as a promising step towards resolving their tariff dispute, fostering confidence among market participants.
As a result, Asian stocks reached their highest levels in over three years at the outset of trading, with US stock futures signaling a strong opening for Wall Street.
The pan-European STOXX 600 index experienced a 0.8 percent increase on the day and is poised to close the week with a 1.1 percent gain—its best performance since mid-May. Similarly, London's FTSE 100 and Germany's DAX indices registered gains of 0.5 percent and 0.6 percent, respectively.
Meanwhile, the MSCI World Equity Index achieved an all-time high and is expected to post a weekly increase of 2.8 percent.
Despite the S&P 500 index being up by just 4.4 percent thus far in 2019, following a tumultuous first half marred by uncertainties surrounding US President Donald Trump's trade policies, market participants are now cautiously optimistic about potential trade deals.
This rebound follows a sharp decline in stock prices subsequent to Trump’s ‘Liberation Day’ tariff announcement on April 2 and a brief downturn linked to geopolitical tensions in the Middle East.
The optimism is further fueled by the looming July 9 deadline set by Trump for European countries to negotiate reduced tariffs.
Mark Haefele, chief investment officer at UBS Global Wealth Management, believes that US and emerging markets hold greater short-term upside potential compared to Europe.
Meanwhile, the dollar continues to experience weakness, hovering near its lowest level in over three years against the euro and sterling.
The dollar index has retreated slightly, trading close to 97.269.
This decline is partly attributed to improved French consumer price data for June, which exceeded expectations.
Market analysts at UBS Wealth Management perceive the US dollar as unattractive, citing increasing speculation about the possibility of a more dovish Federal Reserve Chair being appointed by Trump.
Consequently, investors have intensified their bets on US rate cuts, with expectations now exceeding 64 basis points compared to 46 bps previously.
The dollar's underperformance is particularly notable given its worst start to the year since the inception of free-floating currencies in the early 1970s.
Vasileios Gkionakis from Aviva Investors attributes this trend not only to the reevaluation of the Federal Reserve's stance but also to a broader erosion of US exceptionalism.
In light of these developments, market participants are eagerly awaiting core PCE price data, which serves as the Federal Reserve's preferred measure of inflation and is scheduled for release later in the day.
Furthermore, German 30-year government bond yields are on course for their largest weekly increase in nearly four months, primarily due to expectations of increased borrowing by Germany's government.
This positive sentiment was further reinforced by a temporary ceasefire between Iran and Israel, which has contributed to heightened expectations of imminent US rate cuts.
Additionally, a recent agreement between the US and China regarding rare earth shipments has been interpreted as a promising step towards resolving their tariff dispute, fostering confidence among market participants.
As a result, Asian stocks reached their highest levels in over three years at the outset of trading, with US stock futures signaling a strong opening for Wall Street.
The pan-European STOXX 600 index experienced a 0.8 percent increase on the day and is poised to close the week with a 1.1 percent gain—its best performance since mid-May. Similarly, London's FTSE 100 and Germany's DAX indices registered gains of 0.5 percent and 0.6 percent, respectively.
Meanwhile, the MSCI World Equity Index achieved an all-time high and is expected to post a weekly increase of 2.8 percent.
Despite the S&P 500 index being up by just 4.4 percent thus far in 2019, following a tumultuous first half marred by uncertainties surrounding US President Donald Trump's trade policies, market participants are now cautiously optimistic about potential trade deals.
This rebound follows a sharp decline in stock prices subsequent to Trump’s ‘Liberation Day’ tariff announcement on April 2 and a brief downturn linked to geopolitical tensions in the Middle East.
The optimism is further fueled by the looming July 9 deadline set by Trump for European countries to negotiate reduced tariffs.
Mark Haefele, chief investment officer at UBS Global Wealth Management, believes that US and emerging markets hold greater short-term upside potential compared to Europe.
Meanwhile, the dollar continues to experience weakness, hovering near its lowest level in over three years against the euro and sterling.
The dollar index has retreated slightly, trading close to 97.269.
This decline is partly attributed to improved French consumer price data for June, which exceeded expectations.
Market analysts at UBS Wealth Management perceive the US dollar as unattractive, citing increasing speculation about the possibility of a more dovish Federal Reserve Chair being appointed by Trump.
Consequently, investors have intensified their bets on US rate cuts, with expectations now exceeding 64 basis points compared to 46 bps previously.
The dollar's underperformance is particularly notable given its worst start to the year since the inception of free-floating currencies in the early 1970s.
Vasileios Gkionakis from Aviva Investors attributes this trend not only to the reevaluation of the Federal Reserve's stance but also to a broader erosion of US exceptionalism.
In light of these developments, market participants are eagerly awaiting core PCE price data, which serves as the Federal Reserve's preferred measure of inflation and is scheduled for release later in the day.
Furthermore, German 30-year government bond yields are on course for their largest weekly increase in nearly four months, primarily due to expectations of increased borrowing by Germany's government.
