World stocks gain despite trade war rumblings

Stocks extend Friday’s rally on jobs report momentum
June 22, 2018
Bond, equity markets transmitting trade war fears: Peter Cardillo, Spartan Capital Securities
June 28, 2018

World stocks gain despite trade war rumblings

AFP – The Nasdaq struck a new record and global stock markets recovered further Monday, shrugging off the trade fight between the Untied States and its major commercial partners.

Easing concerns over political turmoil in Italy and Spain, and spillover from the strong US employment report on Friday, pointing to steady growth in the world’s largest economy, also contributed to the gains.

“Fears of a trade war between the US and China are doing little to dent market optimism, with European and Asian indices trading in the green,” noted Joshua Mahony, market analyst at IG trading group.

US tech stocks and blue chips like Twitter, brewer AB-InBev, Walmart and Merck registered strong gains, with few major companies registering losses.

Microsoft’s announcement that it will buy software development platform GitHub in a deal worth $7.5 billion bolstered the sentiment across the tech industry after a drought of big deals.

“It shows that corporate America is not afraid of the political situation,” said Peter Cardillo of Spartan Capital.

European shares were mostly higher, though Milan headed lower amid continuing questions about the new coalition government’s political positions.

In Asia, major markets also registered solid increases.

– G7 summit looms –

The focus is turning to the Group of Seven (G7) summit in Quebec later in the week, where US President Donald Trump is expected to go head-to-head with other world leaders over levies on trade in steel and other products.

The EU and Canada have filed complaints at the World Trade Organization, while US Treasury Secretary Steven Mnuchin faced severe criticism at a G7 finance ministers’ gathering at the weekend.

After weeks of market volatility over fears of a trade war, revelations last week that the US created more jobs than expected in May and that unemployment in the world’s biggest economy was at a near five-decade low have energised global stocks.

“US stocks are adding to Friday’s labour report-fuelled rally in early action, with the global markets appearing to find some relief from cooled European political uncertainty and a June summit between North Korea and the US being put back on,” Charles Schwab analysts wrote.

Capital Economics analysts warned the markets’ defiance of trade war fears may not last.

“Investors have acclimatised to Donald Trump’s ‘megaphone’ diplomacy,” they wrote, but added: “The risk ought to continue to curb investors’ enthusiasm for equities,” they wrote.

They also said Italy’s new government — formed by an anti-establishment, rightwing alliance following weeks of turmoil — may not be such good news for markets after all.

“While the government sworn in by the president on Friday was arguably more market friendly than many might have feared, we don’t think that Italy’s problems are over and expect yields there to rise once more in due course,” they wrote.

– Key figures around 2100 GMT –

New York – Dow Jones: UP 0.7 percent at 24,813.69 (close)

New York – S&P 500: UP 0.5 percent at 2,746.87 (close)

New York – Nasdaq: UP 0.7 percent at 7,606.46 (close)

London – FTSE 100: UP 0.5 percent at 7,741.29 (close)

Paris – CAC 40: UP 0.1 percent at 5,472.91 (close)

Frankfurt – DAX 30: UP 0.4 percent at 12,770.75 (close)

Milan – FTSE MIB: DOWN 0.5 at 22,009.95 (close)

Madrid – IBEX 35: UP 1.2 percent at 9,750.30 (close)

EURO STOXX 50: UP 0.2 percent at 3,091.26

Tokyo – Nikkei 225: UP 1.4 percent at 22,475.94 (close)

Hong Kong – Hang Seng: UP 1.7 percent at 30,997.98 (close)

Shanghai – Composite: UP 0.5 percent at 3,091.19 (close)

Euro/dollar: UP at $1.1698 from $1.1659 at 2100 GMT on Friday

Pound/dollar: DOWN at $1.3315 from $1.3347

Dollar/yen: UP at 109.79 yen from 109.50 yen

Oil – Brent Crude: DOWN $1.50 at $75.29 per barrel

Oil – West Texas Intermediate: DOWN $1.06 at $64.75