Markets rise together with hopes of better US - China trade relations

Global markets have had a rough start to 2019, hurt by a shock revenue warning from iPhone maker Apple and concerns about slowing global economic growth.

However on Friday European shares posted their biggest daily gain since June 2016 as buoyant U.S. job data and hopes of better Sino/U.S. trade relations boosted shares after a gloomy week during which a rare revenue warning from Apple caused havoc.

Federal Reserve Chairman Jerome Powell also reassured investors concerned about a U.S. economic slowdown, saying the central bank would be sensitive to the downside risks currently priced in the market. In the meantime, the latest nonfarm payroll numbers surprised traders, with an increase of 312,000 in December from 155,000 in November. The dollar rose on the back of the fresh data.

Europe’s STOXX 600 rose 2.8 percent, with strong gains across the region’s bourses. The German Dax ended up by 3.3 percent. Britain’s FTSE 100 ended Friday higher by 2.2 percent.

Basic resources stocks, with their heavy exposure to China, were the top gainers in Europe after China’s commerce ministry said the U.S. and China would hold vice-ministerial level negotiations over trade in Beijing on the 7th and 8th January. Auto stocks were also among the top gainers. This is a sector highly sensitive to trade dynamics. Mining companies jumped 5.4 percent, the top gainer as copper prices recovered on news of new trade talks between China and the United States. Oil stocks rallied close to 3 percent, getting a lift from rising oil prices and a survey showing China’s services sector expanded in December.

As the fourth-quarter results season approaches, analysts remain pessimistic about European earnings. They have cut earnings forecasts continuously since September 2018.

In Asia, Shanghai blue chips rose 2.4 percent, while South Korean shares bounced 0.8 percent. Japan’s Nikkei skidded over 2 percent on its first trading day of the year, weighed by growth worries and the strength of the yen.