Shares lift af­ter week dom­i­nated by trade fears

Irish Examiner - - Business -

Global stocks ad­vanced af­ter a tor­rid week dom­i­nated by the threat of an es­ca­lat­ing trade war be­tween the US and China and po­lit­i­cal tur­moil in Bri­tain over Brexit.

“The week is end­ing with the Dow on the cusp of 25,000, a Nas­daq at record highs, de­cent gains for Euro­pean mar­kets, and no talk of trade wars in sight,” said Chris Beauchamp, se­nior mar­ket ad­viser at on­line bro­ker IG.

“That seems like a sat­is­fac­tory con­clu­sion to five days of po­lit­i­cal ten­sion and up­heaval. In the UK the Prime Min­is­ter re­mains in place, and, far from en­dur­ing a deeply em­bar­rass­ing press con­fer­ence with Pres­i­dent Trump, has ac­tu­ally come away with a re­it­er­a­tion of the im­por­tance of the spe­cial re­la­tion­ship and some choice quotes about Brexit that she will no doubt use in the cham­ber next week to good ef­fect,” he said.

In the US, the S&P 500 In­dex pushed through the 2,800 level to the high­est since Fe­bru­ary’s mar­ket cor­rec­tion as in­vestors took so­lace from an on­go­ing pause in trade ten­sions, out­weigh­ing a mixed start to earn­ings sea­son. Mr Beauchamp said US bank earn­ings were not hailed by “a sub­stan­tial rally”.

US en­ergy and in­dus­trial stocks, which had taken the brunt of sell­ing dur­ing the on­go­ing trade spat, led gains on the bench­mark. Cit­i­group shares fell af­ter miss­ing ex­pec­ta­tions, while JPMor­gan Chase’s rose af­ter beat­ing es­ti­mates. Tele­coms weighed on the in­dex as AT&T shares slumped af­ter the US Jus­tice De­part­ment said it will ap­peal an an­titrust rul­ing in favour of the com­pany. The dol­lar headed for its largest weekly gain in a month.

“In­vestors were at least look­ing at banks to see if there was go­ing to be some­thing dis­ap­point­ing in their earn­ings that for them they would say trade talks or any­thing like that are not only point­ing to weak­ness in the over­all global econ­omy, but weak­ness in the US econ­omy, and I don’t think we saw that,” Shawn Cruz, TD Amer­i­trade’s man­ager of trader strat­egy, said. “But I think we’re go­ing to have to get a lit­tle fur­ther into earn­ings sea­son be­fore we get some­thing mean­ing­ful one way or the other in terms of in­vestor sen­ti­ment.”

In Lon­don, as ster­ling re­duced its losses, the Ftse’s dol­lar-earn­ings con­stituents such as con­sumer stocks Di­a­geo, Bri­tish Amer­i­can To­bacco and Unilever came off highs. BAT and Unilever ended lit­tle changed.

Wor­ries over global trade have kept the Ftse trad­ing in a nar­row range through­out June and into July, as in­vestors have weighed the im­pli­ca­tions for global growth and eq­uity mar­kets of tit-for-tat tar­iffs im­posed by the US and China.

For the week, the Ftse rose 0.6%. Traders will feel some re­lief as the US earn­ings sea­son gets un­der way in earnest, al­low­ing at­ten­tion to pivot away from trade re­la­tions. The lat­ter seemed to ease some­what, with of­fi­cials in Bei­jing ap­pear­ing to mod­er­ate their re­sponses to Mr Trump’s tar­iff threats amid a slow­ing econ­omy, fall­ing stock mar­ket and weak­en­ing cur­rency.

“The mar­kets be­gan to flat­ten out as the week wrapped up, the pound re­cov­er­ing some of its early losses as Trump ap­peared to row back from the ag­gres­sive stance taken against Theresa May’s Brexit plans,” said Spreadex an­a­lyst Connor Camp­bell.

Still, China’s monthly trade sur­plus with the US rose to a record in June and ex­ports to the na­tion also soared, un­der­lin­ing the cause of the es­ca­lat­ing trade war.

■ Bloomberg, Irish Ex­am­iner, and Reuters staff

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