The New York Stock Exchange. On Friday, the S&P 500 index closed 0.11 per cent higher to 2,801.31, after hitting a high of 2,804.53, its highest in five weeks. Image Credit: AFP

Dubai: Global stocks are expected to extend gains this week on the back of strong second-quarter earnings despite concerns over the upcoming meeting between US President Donald Trump and Russian President Vladimir Putin.

The Dow Jones Industrial Average closed 0.38 per cent higher at 25,019.41 on Friday, after gaining 2.3 per cent in the past week. The S&P 500 index closed 0.11 per cent higher to 2,801.31, after hitting a high of 2,804.53, its highest in five weeks. The index has gained 1.5 per cent over the past week.

The MSCI Emerging Market Index closed half a per cent higher at 1,075.64.

“The investors’ focus has shifted to the earnings season and that is likely to continue this week. So far, the earnings season has gotten off to a positive start and should that trend continue, equities are likely to continue building onto the gains of the previous week,” said Aditya Pugalia, a director at Emirates NBD.

Traders will await second-quarter results from Netflix, Goldman Sachs, IBM and Microsoft this week. Traders will also eye policy rate cues from the Federal Reserve Chair Jerome Powell, who appears Tuesday and Wednesday before congressional panels on the economy and monetary policy.

On the trade war front, Emirates NBD said that European equities appear more vulnerable as they derive a significant percentage of revenues from exports.

“However, it is interesting to note that small-cap stocks in Europe have outperformed the large-cap stocks. One plausible reason for this is the limited impact of trade tariffs on small-cap companies,” Pugalia said.

Last week, Treasury Secretary Steven Mnuchin said that the United States and China might reopen trade talks, briefly easing concerns about an escalating trade dispute between the two countries.

Dollar index

The dollar index came off from its highest level in two weeks on Friday, with the index closed 0.14 per cent lower to 94.44.

“The dollar index may be stronger. Once you have trade war, there is bound to be a dollar shortage, and the greenback is bound to strengthen,” said an currency analyst who wished not to be named.

“It may be much stronger against the yen compared to euro or pound. The upside in dollar-yen will be more pronounced when it breaches 113.3,” the analyst added.

The yen was quoted at 112.35 against the dollar, a level last seen in January. International spot gold prices were 0.51 per cent higher at $1,241.51 (Dh4,560.06) an ounce.

“Going forward, a move above $1,248 would push the prices higher towards $1,255-$1,260. On the downside, $1,242-$1,240 is likely to act as short-term support,” Vijay Valecha, chief market analyst at Century Financial, said in a note. Gold prices are down about 9 per cent since mid-April.