Global stock markets rose on Friday as optimism on the US economic outlook outweighed lingering trade war worries, dealers said.
European equities were all solidly higher, with London outshining its peers thanks to a slipping pound as Brexit talks appeared to be stalling.
Wall Street was higher out of the gate, 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.
The benchmark S&P 500 and the Dow Jones Industrial Average hit record highs at the open on Friday, while the Nasdaq rose on gains in technology stocks.
The Dow Jones Industrial Average rose 69.27 points, or 0.26 per cent, at the open to 26,726.25.
The S&P 500 opened higher by 6.01 points, or 0.21 per cent, at 2,936.76. The Nasdaq Composite gained 13.46 points, or 0.17 per cent, to 8,041.69 at the opening bell.
“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.
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”. The pound dropped as much as 1.4 per cent to $1.3080 as of 2:15pm in London, paring its gain this week to 0.2 per cent. It climbed to $1.3298 Thursday, the highest level since July.
‘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”.
Asian equities enjoyed another day of strong buying to finish the week with a flourish.
Shanghai surged 2.5 per cent 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,” saisd 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 per cent, while the Indonesian rupiah added 0.3 per cent and the Indian rupee was up 0.7 per cent, pulling it away from recent record lows. South Africa’s rand and the Turkish lira jumped more than one per cent.
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.