Global equities gain on trade deal, Chinese data

Global equities rose on Friday, with Wall Street stocks ending at fresh records, as solid Chinese economic data brightened the global outlook following the landmark US-China trade deal earlier in the week.

European markets were all higher following signs the Chinese economy is stabilizing. "China released some broadly positive economic reports, which has boosted sentiment around the globe," said CMC Markets analyst David Madden.

Apart from a blip last week caused by the US killing of Iran's top general, markets have had a strong start to the new decade, building on the rally of late 2019.

The gains have been fanned by the "phase one" trade agreement signed this week by the United States and China as well as signs of improvement in various economies, lower interest rates, government stimulus and easing Brexit concerns.

The prospect of a healthy batch of corporate earnings means there are hopes for further advances as well. Analysts see few economic clouds on the horizon in the short term but worry that high stock valuations could prompt a selloff. Beijing contributed to the feel-good atmosphere, releasing data that said the world's second biggest economy expanded by 6.1 percent last year.

While that was the slowest pace in three decades and well below the 2018 level of 6.6 percent, it was in line with expectations and the government's target.

The six percent growth for OctoberDecember was the same as the previous quarter, and traders were cheered by a better-than-forecast rise in retail sales, industrial output and investment.

The slowdown in Chinese growth has been a major headache for investors for the past few years as the country's leaders struggle with the US trade war, slowing global demand and a worrying debt mountain. Later Friday, US data showed December construction of new US housing shot to a 13-year high, added to positive investor sentiment.

Asia equities extended a global rally on Tuesday, with the US decision to no longer designate China a currency manipulator a further sign of easing tensions between the economic titans. The Treasury announcement came days before the two sides are due to sign off on the first part of a wider trade agreement that has helped fan a rally in world markets.

It also led to a sell-off in safe-haven assets with the yen at a seven-month low and gold down almost one percent, while oil was also struggling with the US-Iran flare-up seemingly in the rear window for investors. Asia was given a firm lead from Wall Street, where all three main indexes ended higher with the Nasdaq and S&P 500 hitting fresh records on reports the US was about to remove the manipulator label from China. Donald Trump accused Beijing in August of weakening its yuan currency "to steal our business and factories", re-stating a long-standing grievance.

But soon after the end of trade on Monday, the Treasury said in its semiannual report to Congress that the unit had strengthened and Beijing was no longer keeping it artificially weak. The yuan jumped more than one percent at one point Tuesday before easing slightly. The currency is up more than four percent from an 11-year low touched in September.

"The yuan is the purest and best barometer to gauge the market's view on

US-China trade tension," said AxiTrader's Stephen Innes. "With the yuan strengthening ahead of the 'phase one' deal signing, it's indicating the potential for further improvement in trade relations."

The US reversal of China's status as a manipulator "is a most precise and definitive de-escalation of trade tension to date and provides a less congested road as we pivot to phase two of the broader trade agreement", he added.

Data on Tuesday showed China's trade surplus with the US narrowed 8.5 percent in 2019, which will likely play well in the White House, where the huge disparity is a key bone of contention in the White House and a major catalyst of the trade war.