NEW YORK. Hopes for a thaw in the US-China trade war helped a gauge of global stocks rise on Friday despite a tepid performance on Wall Street, though caution over pending American tariffs on Chinese goods put the yuan on track for its biggest monthly decline in 25 years.
Statements from US President Donald Trump and China’s commerce ministry on Thursday that the countries were scheduling trade talks brought some respite to equities, which have been roiled by the escalating trade war.
The pan-European Stoxx 600 ended 0.7 per cent higher, helped by a surge in German real estate shares. The MSCI All-Country World Index rose 0.35 per cent. Emerging markets shares also jumped 1.5 per cent, posting their biggest daily percentage gain since June.
On Wall Street, the Dow Jones Industrial Average rose 41.03 points, or 0.16 per cent, to 26,403.28, the S&P 500 gained 1.88 points, or 0.06 per cent, to 2,926.46 and the Nasdaq Composite dropped 10.51 points, or 0.13 per cent, to 7,962.88.
Despite the day’s gains, MSCI’s gauge of global stocks posted its second monthly loss of the year and its biggest August percentage decline since 2015.
Some market watchers expressed caution given the fluctuating rhetoric and said US markets, which will be closed on Monday for the Labour Day holiday, could be especially vulnerable if trade tensions re-escalate over the long weekend. The Trump administration on Sunday is scheduled to begin collecting 15 per cent tariffs on more than $125 billion in Chinese imports, including smart speakers, Bluetooth headphones and many types of footwear.
China’s yuan fell 0.27 per cent to 7.1616 per dollar and was on track for its weakest month since Beijing’s currency reform in 1994.
“Frankly, markets have been overly optimistic about trade,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas. “I would caution people to be a little careful because optimism won’t last if it doesn’t ultimately materialise into something substantive like an agreement.” Benchmark US Treasury yields fell, with the yield curve between 2-year and 10-year notes still inverted, seen as a signal that a recession is likely in one to two years.
Ten-year Treasury notes last rose 4/32 in price to yield 1.5028 per cent, from 1.516 per cent late on Thursday.
Italian bond yields registered one of their biggest monthly decline in more than six years after the anti-establishment 5-Star Movement and opposition Democratic Party reached an agreement on a coalition government.
Among currencies, the euro reached its weakest level since May 2017 as expectations grew for aggressive easing by the European Central Bank following weak economic data on Thursday.
The euro was last 0.57 per cent lower at $1.10.
Argentina’s peso slumped 2.8 per cent on Friday after Standard & Poor’s cut the country’s long-term credit rating. In August, the peso logged its biggest-ever monthly percentage drop.
The dollar index rose 0.31 per cent.
The safe-haven Japanese yen rose 0.24 per cent to 106.24 per dollar and was on track for its biggest monthly gain since May.
Sterling fell 0.18 per cent to $1.2166 ahead of a crucial period for the British parliament before it is suspended ahead of Britain’s scheduled exit from the European Union on Oct. 31.
In commodities, spot gold fell 0.25 per cent to $1,523.55 an ounce but was set for its fourth straight month of gains. Silver rose 0.59 per cent to $18.35 per ounce and was on track for its biggest monthly percentage gain since June 2016.
Oil prices fell on concerns that disruption from Hurricane Dorian, headed for Florida, could dampen demand. US crude settled 2.84 per cent lower at $55.10 a barrel, while Brent settled at $60.43 a barrel, down 1.06 per cent on the day.