Global equities rose on Friday as investors, still buoyed by a landmark China-US trade deal, turned their focus to the earnings season and the global outlook, while also cheered by Chinese economic data.
In early afternoon European trade, London rose 1.0 per cent, Frankfurt jumped 0.7 per cent and Paris added 0.9 per cent, aided by news that China’s economy appears to be stabilising.
‘Stock markets in Europe are higher this morning as the bullish move in Asia overnight has influenced traders in this part of the world,’ said CMC Markets analyst David Madden.
‘China released some broadly positive economic reports, which has boosted sentiment around the globe.’
All three main indices on Wall Street ended at record highs on Thursday, boosted by the Senate’s approval of a new North American free-trade deal, while Google parent Alphabet joined Apple and Microsoft to become a trillion-dollar firm for the first time.
The positive energy funnelled through to Asia on Friday as Asian equities rose with investors, still buoyed by the China-US trade deal, turned their focus to earnings season and the global outlook, while they were also cheered by data indicating China’s economy appears to be stabilising.
Hong Kong on the day gained 0.6 per cent, Tokyo ended 0.5 per cent higher, Shanghai rose 0.1 per cent and Sydney added 0.3 per cent.
Seoul edged up 0.1 per cent and Taipei put on 0.2 per cent, with Mumbai, Bangkok, Wellington and Manila also well up.
Apart from last week’s blip caused by the US assassination of Iran’s top general, markets have enjoyed a strong start to the new decade, building on the rally of late 2019.
The gains have been fanned by the ‘phase one’ trade agreement as well as signs of improvement in worldwide economies, lower interest rates, government stimulus and easing Brexit concerns.
And with the prospect of a healthy batch of company reports, there are hopes for further advances.
‘It’s very hard to be bearish here,’ Linda Duessel, at Federated Investors Management, told Bloomberg TV. ‘We could have really good earnings surprises to the upside’ as more profit reports roll in, she said.
Beijing added to the mood, releasing data that said the world’s number two economy expanded 6.1 per cent last year.
While that is the slowest pace in three decades and well down from 6.6 per cent in 2018, it is in line with expectations and the government’s target.
The 6-per cent growth for October-December was the same as the previous quarter, while traders were also cheered by figures showing a better-than-forecast rise in retail sales, industrial output and investment.
The slowdown in growth in China has been a major headache for investors for the past few years as the country’s leaders struggle with the US trade war, slowing global demand and a worrying debt mountain.
Still, while there is hope that 2020 could see healthy advances for equities, some doubt remains.
Progress on the next round of China-US talks ‘will continue to hog the limelight in 2020’, said AxiTrader’s Stephen Innes, who added that ‘trade discussions between the US and the EU remain open-ended, while the commencement of bilateral EU and the UK trade discussions could get thorny’.
‘But perhaps the real elephant in the room, the US (presidential) election in November, will also increasingly preoccupy investors as we move through the year.’
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