Equities markets advance on revived US-China trade hopes
European shares clock sixth weekly gain
NEW YORK, Nov 16, (RTRS): Global equities markets rallied on Friday, with the major US indexes setting record highs, on renewed optimism the United States and China are nearing a deal to de-escalate a 16-month trade war that has crimped global growth.
Equity markets from Tokyo to the major bourses in Europe and across the Americas gained on remarks by White House officials, after sputtering earlier in the week when President Donald Trump dashed hopes of a deal.
Progress was being made on an agreement’s details, according to US Commerce Secretary Wilbur Ross, who said trade talks were set to continue with a telephone call on Friday as both sides seek to hammer out a “phase one” pact.
MSCI’s gauge of stocks across the globe gained 0.76%, lifting it to within 1% of an all-time high set in January 2018. Its emerging markets index rose 0.67%.
In Europe, the pan-regional STOXX 600 index closed 0.4% higher, close to four-year highs it hit last week. The FTSEurofirst 300 index of leading shares added 0.33%.
On Wall Street, the S&P 500 posted its sixth straight week of gains in a rally that has lifted the benchmark index 8% since early October.
The Dow Jones Industrial Average rose 222.93 points, or 0.8%, to 28,004.89, the S&P 500 gained 23.83 points, or 0.77%, to 3,120.46 and the Nasdaq Composite added 61.81 points, or 0.73%, to 8,540.83.
“The market rally has largely been driven by the positive sentiment around the trade talks, obviously,” said Rahul Shah, chief executive of Ideal Asset Management in New York.
The fourth quarter, which tends to be the best period for corporate earnings, will likely be supportive of stocks, but poor macroeconomic data or a political event could trigger a downturn, Shah said.
The S&P 500 has gained more than 24% year to date, and the benchmark index is trading at 18 times forward earnings, or higher than a historical norm of about 15.
All but one of the 11 major S&P 500 sectors were higher, with healthcare leading the way, gaining 2.21% as Johnson & Johnson and Pfizer lifted the sector.
US
Wall Street’s main stock indexes closed at record levels on Friday, fueled by fresh optimism over a potential calming of US-China trade tensions and by big gains in shares of healthcare companies.
The benchmark S&P 500 tallied its sixth straight week of gains, its longest such weekly streak in about two years, while the Dow breached 28,000 for the first time.
The stock market has climbed recently to record highs, driven by Federal Reserve interest rate cuts, third-quarter earnings topping low expectations and signs that economic growth may be bottoming, while uncertainty over US-China trade relations remains a wild card.
The Dow Jones Industrial Average rose 222.93 points, or 0.8%, to 28,004.89, the S&P 500 gained 23.83 points, or 0.77%, to 3,120.46 and the Nasdaq Composite added 61.81 points, or 0.73%, to 8,540.83.
Ten of 11 S&P 500 sectors ended positive. Healthcare led the way, gaining 2.2% for its biggest one-day percentage rise since January, with UnitedHealth Group shares surging 5.3% and Pfizer rising 2.0%.
Shares of Applied Materials soared 9.0% after the chip gear maker forecast first-quarter revenue and profit above Wall Street estimates.
The Philadelphia SE Semiconductor index gained 0.9% and hit a record high. Enthusiasm for the group was tempered by a 2.7% decline in Nvidia shares following the chipmaker’s report.
Data on Friday showed US retail sales rebounded in October, but consumers cut back on purchases of bigticket household items and clothing, which could temper expectations for a strong holiday shopping season.
Advancing issues outnumbered declining ones on the NYSE by a 1.84to-1 ratio; on Nasdaq, a 1.50-to-1 ratio favored advancers.
The S&P 500 posted 52 new 52-week highs and one new low; the Nasdaq Composite recorded 121 new highs and 108 new lows.
About 6.5 billion shares changed hands in US exchanges, below the 6.9 billion-share daily average over the last 20 sessions.
UK
London’s mid-cap index outperformed its European counterparts on Friday after the Brexit Party lent further clarity ahead of the Dec 12 election, while hopes that a US-China may be imminent helped the FTSE 100 eke out gains.
The FTSE 250 advanced 0.9% as domestically-focused stocks rose after Nigel Farage’s party stood down from more seats not held by the Conservative Party, which could help Tories gain a majority in the upcoming election.
As a result, the index bagged its third straight week of gains.
A Conservative victory is being considered most likely to push Brexit through. Blue-chip homebuilders Persimmon and Taylor Wimpey, traditionally more exposed to Brexit developments, also rose.
The main index inched 0.1% higher, boosted by miners , as well as oil majors BP and Shell.
That outweighed a dip in exporter stocks as sterling rose to a 10-day high after political developments at home.
Shares of telecom companies were a major blip on the index after Britain’s opposition Labour party vowed to nationalise parts of the telecoms provider BT if it won power in the Dec 12 election.
BT slipped 1%, while peers Vodafone and TalkTalk gave up roughly 3% each, after Labour’s latest salvo less than a month out from the election, in which Credit Suisse believes Tories currently have the edge.
Some other firms at risk of being nationalised under a Labour government, though initially muted, gained after prospects of a Tory victory increased. Royal Mail added 2.7% and RBS climbed 1.5%.
FirstGroup led mid-cap gainers with an 8% rise after Britain’s competition watchdog said it could accept undertakings offered by the company and Italy’s TrenItalia for the West Coast rail franchise.
Struggling floor coverings retailer Carpetright surged 15% to 4.87 pence, its best day in nearly seven months, after agreeing to be taken private by its largest shareholder in a 5 pence a share deal.
By contrast, lender Non-Standard Finance tumbled 18% to an all-time low after a profit warning. Its shares have slumped nearly 30% since June, when it failed in a hostile takeover of larger rival Provident Financial .
Europe
European shares clocked a sixth straight week of gains on Friday following record highs on Wall Street after bullish comments from a White House official on US-China trade talks.
The pan-European STOXX 600 index rose 0.4%, close to four-year highs it hit last week, with most sectors ending in the black.
European indices that see-sawed through the week on conflicting trade headlines, glum economic indicators, mixed corporate outlook and some rocky Spanish politics, managed to end the week marginally higher.
Trade-sensitive commodity-linked and technology stocks led gains on the day, while defensive plays like utilities and telecom lagged.
Chipmakers Infineon, STMicroelectronics and ASML Holding were all up on industry bellwether Applied Materials’ upbeat forecast for the first quarter in 2020.
A.P. Moller-Maersk was the biggest climber in the STOXX 600 index after the world’s biggest container shipping firm said that despite an uncertain economic outlook, a focus on driving down costs put it on track to improve its profit margin.
A handful of disappointments among stocks listed in the Nordic region kept overall gains in check.