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Global Markets: Trade hopes, tech, and Turkey bolster world stocks

Reuters  |  LONDON 

By Ritvik Carvalho

LONDON (Reuters) - Shares rose around the world on Friday as expectations grew that the and would open new trade talks, while an interest rate hike in supported the lira and global risk appetite.

The index, which tracks shares in 47 countries, was up nearly half a percent on the day after the start of trade in

Led by technology and autos stocks, the pan-European index rose half a percent, set for its best weekly gains in seven weeks.

Tech stocks rose 0.7 percent after gained on Wall Street following Europe's close.

MSCI's broadest index of shares outside gained 1.2 percent. Australian shares were up 0.6 percent, Seoul's rose 1.4 percent and Hong Kong's Hang Seng gained 1 percent. Japan's Nikkei stock index was 1.2 percent higher.

Those rises followed gains on Wall Street Thursday, with the Dow Jones Industrial Average ending 0.57 percent higher, the gaining 0.53 percent and the adding 0.75 percent.

Chinese shares fell, despite a short-lived bump from data that showed forecast-topping industrial output and for August.

Other data showed in the country fell in August, raising concern that a cooling property market could increase risks for China's economic outlook as the trade environment worsens.

China's benchmark Shanghai Composite index was down 0.2 percent and the blue-chip CSI300 index rose 0.2 percent.

Chinese officials welcomed an invitation from for new talks. But U.S. tempered market expectations, tweeting on Thursday that the U.S. is "under no pressure to make a deal with China".

The is readying a final list of $200 billion worth of Chinese imports that it plans to levy tariffs on in coming days. That move would mark an escalation in the trade war and could significantly slow global growth.

Analysts at noted that Mnuchin had struck a deal with in May that was scuppered days later by Trump.

"As a result, he has little credibility with Chinese policymakers," they said.

On Friday, the state-run English-language newspaper Daily said in an editorial that China would not "surrender" to U.S. demands and "will not hesitate to take countermeasures against U.S. tariffs to safeguard China's interests".

Uncertainty around the global outlook for trade was highlighted by the European Central Bank, which on Thursday kept policy unchanged as expected and warned that risks from protectionism were growing.

'EYE-WATERING'

interest rate increase by Turkey's central to support a tumbling lira boosted risk appetite in emerging markets. The hiked its benchmark interest rate by 625 basis points, to 24 percent.

Currency crises in both and have stoked fears of contagion over the past several weeks, hammering emerging market assets from to to

After rising as high as 6.1442 to the dollar, the lira eased slightly to 6.0768 on Friday.

Turkish lira implied volatility gauges fell to their lowest levels in more than a month on Friday, as sentiment continued to improve.

"The bold decision (by Turkey's central bank) reduces the risk that a full-scale financial crisis may unfold," wrote analysts at in a note to clients.

"That said, it's only the first step and we remain of the view that a rate hike on its own may not prove sufficient to lead to a sustainable recovery in the lira. The central bank's efforts must be accompanied by an implementation of constructive macro prudential policies by the administration."

The euro hit a two-week high, extending Thursday's gains after comments from ECB that focused on healthy domestic fundamentals, including rapid growth in employment and a rise in wages.

The pound reached a six-week high of $1.3139, up 0.3 percent and set for its second biggest weekly rise of 2018.

The dollar eased 0.1 percent against the yen to 111.82.

U.S. crude was 0.3 percent higher at $69.12 a barrel as Hurricane approached the Brent crude rose 0.6 percent to $78.62 per barrel.

Spot gold gained over half a percent to $1208.05 per ounce.

(Reporting by Ritvik Carvalho, additional reporting by in London; editing by Larry King)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, September 14 2018. 14:50 IST
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