Global stocks have made gains as investors hold out hopes for a trade deal between the United States and China, even as another round of US tariffs on Chinese goods take effect.
European stock markets bounced off six-week lows, with Germany’s trade-sensitive DAX index leading the charge with a 1 per cent rise.
MSCI’s All-Country World Index, which tracks stocks across 47 countries, was up 0.2 per cent after the start of European trading.
But the gauge was set for its worst weekly performance since December 2018, with a loss of 2.75 per cent as US-China trade tensions ratcheted up again.
President Donald Trump’s tariff increase to 25 per cent from 10 per cent on $US200 billion ($A286 billion) of Chinese goods kicked in on Friday and Beijing said it would strike back.
Negotiators are in talks to try to rescue a faltering deal between the world’s two largest economies.
The White House says they will resume on Friday in Washington after concluding the first of two days on Thursday.
That has encouraged some investors to cling to hopes the US will revoke the new tariff hike once a deal is reached.
US stock futures fell and Asian shares pared gains after the US tariff hike, with investors worried that a protracted trade war could hamper global economic growth.
UBS Wealth Management cut its exposure to emerging market stocks late on Thursday, changing its portfolio as the intensification of trade tensions took its toll on markets.
Trump also threatened on Thursday to take steps to authorise new tariffs on $US325 billion in Chinese imports.
MSCI’s broadest index of Asia-Pacific shares outside Japan , which dropped more than 1 per cent early on Friday, remained where they were when tariff increase kicked in, up 0.3 per cent. Japan’s Nikkei was off 0.3 per cent.
In currencies, the dollar was higher by 0.05 per cent against a basket of peers. The Japanese yen was flat, having gained 1.2 per cent this week. The euro was higher by 0.1 per cent to the dollar. Rising geopolitical tensions were also not helping markets.
North Korea fired what appeared to be two short-range missiles on Thursday in its second such test in less than a week and the United States said it had seized a North Korean cargo ship.
On Iran, Trump said he could not rule out a military confrontation after Tehran relaxed restrictions on its nuclear program in response to US sanctions imposed following Trump’s withdrawal of the United States from the accord with a year ago.
The 10-year US Treasuries yield stood at 2.454 per cent near its lowest levels since late March. Three-month bill yields stood at 2.456 per cent.
The 10-year yield briefly fell below the shorter three-month yields on Thursday, stoking recession fears.
German 10-year government bond yields were headed for their biggest weekly fall in seven weeks in a sign that a ratcheting up in US/China trade tensions have exacerbated concern about the global growth outlook. MSCI’s emerging market currency index also tumbled to a four-month low on Thursday.
Oil prices rose. Brent was up 0.3 per cent to $70.61 a barrel while US West Texas Intermediate crude fell 0.3 per cent to $61.89. Gold ticked up 0.1 per cent to $1,284.84 per ounce.
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