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Global Stocks Rally Before Earnings, Trade War Jolt Boosts Dollar

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World stocks rose for a second consecutive week on Friday as investors prepared for an expected run of strong earnings in the United States, although fears about the U.S.-China trade conflict kept gains in check and pushed the dollar higher. Expectations of a bumper U.S. earnings season and news that China’s overall global export growth beat expectations led European shares up on Friday with industrials and technology sending the pan-European STOXX 600 up 0.2 percent.

Markets appeared broadly risk-friendly as a weakening safe-haven yen helped lift Japan’s Nikkei stock index .N22 Chinese trade data showed its trade surplus with the United States swelling to a record in June and some fear that could further inflame a trade dispute with Washington.

“The record surplus with the U.S. will inevitably get top billing… China’s exporters have been front-loading exports to beat the imposition of tariffs, implying a relatively sharp drop in coming months,” ADM Investor Services market strategist Mark Otswald said.

With investors braced for the impact of tit-for-tat tariffs, one of China’s main indexes edged lower and China’s yuan headed for its fifth straight week of losses. CNH=EBS

While China has vowed to retaliate to the proposed new U.S. tariffs – 10 percent on $200 billion of Chinese goods – the lack of a specific response to date has sparked global relief.

On Friday, S&P500 e-mini futures ESc1 rose to a five-month high on expectations of solid earnings growth among U.S. firms despite the trade war concern.

5 two percent. That followed the S&P500 hitting four-month highs on Wall Street overnight.

Yet fears about the impact of an escalating U.S.-China trade war continue to cloud the outlook.

 


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