Global stocks rally over US job report, deal hope

Markets expect China & US to sign a mini-trade pact

London, Nov. 4: Global stock markets rallied on Monday as optimism from a forecast-busting US jobs report lingered and confidence grew that China and the United States will finally sign off on a mini trade pact. Investor sentiment was also lifted by British Airways owner IAG, which agreed to buy Spain's Air Europa for 1.0 billion euros ($1.2 billion), sending its share price more than 1.5 per cent higher in London. European markets were "starting off the week in positive fashion, with stocks following their Asian counterparts higher amid optimism over an upside surprise to Friday's jobs report and US-China talks," said IG Analyst Joshua Mahoney. Wall Street also opened higher, building on a strong performance Friday after the Labor Department said the US created 1,28,000 net new jobs in October, far surpassing the 80,000 expected, while the figure for the previous two months was also revised upwards.

The reading came days after data showed the world's top economy slowed slightly in July-September but not as much as projected, which suggested it is stabilising.

"US stocks are higher in early action, following a fourth-straight weekly gain to all-time highs, with USChina trade optimism doing most of the heavy lifting, along with the better-than-feared earnings season," analysts at Charles Schwab said.

In Asia, Hong Kong, Seoul, Bangkok and Taipei each piled on more than one per cent while Shanghai jumped 0.6 per cent.

In Europe, Frankfurt, London, Paris and Milan enjoyed gains of well over one per cent.

The upbeat mood was enhanced by comments from Chinese Vice Premier Liu He that indicated trade talks with Washington were on track.

Liu said he had spoken on Friday to US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, with both sides saying the talks were "constructive".

Progress on the discussions has provided support to equities for the past few weeks, with speculation that Donald Trump and Xi Jinping will meet this month to sign off on the mini pact.

While the agreement would only be the first part of a wider deal, it would be a major step after more than a year of a trade war that has undermined the world economy.

However, National Australia Bank's Rodrigo Catril warned there were still important issues to address.

"As much as the US-China trade updates continue to point to a phase one deal looking like a certainty, the contentious issues on whether the US will cancel the planned December tariffs and remove some of the current tariffs in line with China's demands remains an unknown and if the issue is not resolved then a deal could easily collapse," he said in a note.