Global shares experience their best January on record

Global shares edged down from their highest in two months on Friday as data showing shrinking factory activity in China ended a rally that took them to their best January on record.

Stocks have benefited this week from the U.S. Federal Reserve, which all but abandoned plans for raising interest rates again, and on optimism that a U.S.-China trade deal might be on the cards. However the Caixin/Markit index of Chinese manufacturing fell to its lowest since February 2016, adding to a growing list of economic readings indicating slowing global growth.

MSCI’s All Country World Index, which tracks stock markets in 47 countries, came off its highest level since the 4 December after its best January gain on record - up 7.79 percent on the month.

Equity markets have been relieved by a change of heart at the U.S. Federal Reserve, which signalled this week that its three-year drive to tighten monetary policy may be at an end as the outlook for the U.S. economy worsens. The Fed held rates steady, discarded its promise of “further gradual increases” in rates and said it would be “patient” before making any further moves.

Stocks had also gained after U.S. President Donald Trump said he would meet Chinese President Xi Jinping soon to try to seal a comprehensive trade deal. The top U.S. negotiator at the talks reported “substantial progress” in the talks. Beijing’s trade delegation said they made “important progress”, China’s official Xinhua news agency reported.

Gold prices hovered just short of nine-month highs, supported by the fall in bond yields and expectations for a softer dollar. Spot gold rose 0.1 percent to $1,321.03 per ounce, having touched a top of $1,326.30.

Oil prices were subdued as the China data offset signs major exporters were reducing output. U.S. crude futures were flat at $53.79 per barrel, while Brent rose 0.2 percent to $60.93.