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Global Markets: Stocks stay strong as Europe shrugs off Samsung warning

Reuters  |  LONDON 

By Marc Jones

LONDON (Reuters) - A solid shift from and high Wall Street futures kept world stocks at a three-week high on Tuesday, after was knocked back by a shock profit warning from tech giant and a tick-up in borrowing costs.

Hopes that and may be moving towards a trade deal was helping the mood again and also gave the dollar a lift in the currency markets after its shaky start to the year.

That rise, along with the alarm from South Korea's that it would badly miss its earnings forecasts, caused a slip in emerging markets, but held its nerve -- unlike last week after a similar warning from

The pan-European STOXX 600 rose 1 percent despite some a choppy day in as stepped in to support another of its struggling lenders. Britain's FTSE was up 0.9 percent too as its retailers cheered rare good about trading. [.EU]

"I think the market has been quite extreme in pricing recession risks, so I think we have value now in both the equity and bond markets," SEB investment management's global of asset allocation said.

"The discussions between the U.S and will take some time but I think the markets are prepared to move in the right direction on positive signals."

U.S. had predicted on Monday that and could reach a trade deal that "we can live with" as dozens of officials from the world's two largest economies resumed talks in

S&P 500 futures gained 0.6 percent following a near 4 percent surge on Wall Street since Friday, led by and which have been recovering some of the ground they lost during a brutal end to 2018.

MSCI's broadest index of shares ended down 0.2 percent, however. It was dragged lower by falls in due to and in where government bond yields also saw their biggest daily gain in nine months.

said Beijing had "good faith" to work with the to resolve trade friction, but many analysts doubt the two sides can reach a comprehensive agreement on all of the issues before a March deadline.

"Various concerns markets had earlier are receding for now. Still, there's no denying that U.S. (company) earnings momentum is slowing," said Hirokazu Kabeya, at

"Ultimately we need to see whether upcoming earnings reports can dispel market concerns."

DOLLAR STIRS

The dollar has its tail up, trading at 108.71 yen and $1.1460 to the euro as an unexpected fall in German industrial output for the third straight month helped to weaken the euro zone currency.

The British pound traded roughly flat at $1.2780 as British and European officials played down a report in newspaper that plans to extend Britain's formal Article 50 notice to withdraw from the by March 29.

"I wouldn't really want to think about the possibility of extending Article 50 here and now," said I don't think this is what we ought to focus on today," German told journalists during a visit to

Elsewhere, the Canadian dollar hit one-month highs, having gained 2.7 percent in the past five days on gains in and on speculation the will raise interest rates again this week. It last stood at 1.3272 per U.S. dollar.

In the government bond markets, Europe's yields were squeezed higher by a deluge of upcoming debt sales and the 10-year U.S. Treasuries yield bounced back to 2.687 percent, from Friday's near one-year low of 2.543 percent.

Still, its latest level is more than 50 basis points below its October peak of 3.261 percent and some recent caution from the of the Federal Reserve mean futures markets are now pricing in a slim chance of a U.S. rate cut this year.

were also up again on Tuesday, supported by hopes for Sino-U.S. trade talks in Beijing and a report that is planning to cut crude exports to around 7.1 million barrels per day (bpd) by the end of January.

Both U.S. Intermediate (WTI) crude futures and International futures stayed firm at $48.81 and $57.67 per barrel, respectively, while safe-haven gold eased back to $1,283 an ounce.

(Reporting by Marc Jones, Editing by and Alison Williams)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, January 08 2019. 17:57 IST
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