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Trade Prospects Lift Global Stocks

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09/14/2018 | 09:27am EST

By Riva Gold
-- Stocks head for weekly gains
-- U.S. retail sales eyed
-- Nikkei closes at highest since February

Global stocks inched higher Friday as trade prospects appeared to improve, putting most major indexes on track for weekly gains.

Futures pointed to a 0.1% opening rise for the S&P 500 after the index notched its biggest gain in two weeks on Thursday. The Stoxx Europe 600 was up 0.2% in afternoon trading, while markets in Asia closed higher.

Stocks have swung back and forth in recent sessions as investors attempt to assess the potential impact of new trade agreements on supply chains and the global economy.

The latest boost for stocks appeared to come from news the Trump administration is giving Beijing another chance to try to stave off new tariffs on $200 billion in Chinese exports, asking top officials for a fresh round of trade talks later this month, The Wall Street Journal reported earlier this week.

"What's driving intraday volatility and choppiness in the market? It's going to be trade," said Shawn Cruz, who manages trading strategy at TD Ameritrade. "We still haven't seen what's actually going to get put in place...so it's more or less a risk aversion exercise."

Technology stocks were among the best performers in Europe and Asia on Friday after Apple and other technology companies led gains in the U.S. on Thursday, a day after announcing a new lineup of mobile devices.

In Europe, shares of Siltronic rose 4.2% while STMicroelectronics and Infineon Technologies rose 1.4% and 1.8%, respectively. AAC Technologies Holdings rose 5.5% in Hong Kong.

Shares of auto and mining companies were also among the biggest advancers in Europe while banks lagged behind.

Shares in Danske Bank fell almost 1.7% after The Wall Street Journal reported that U.S. law enforcement agencies are probing Denmark's largest bank over allegations of massive money-laundering flows from Russia and former Soviet states.

Asian stocks were broadly higher, with benchmarks in Japan, Hong Kong and South Korea up 1% or more thanks to support from companies in the technology and consumer discretionary sectors. Japan's Nikkei closed at its highest level since early February, ending its best week since July.

Shanghai stocks edged down 0.2% however, posting a third straight weekly decline. Investment in factories, railways and other projects in China so far this year grew at its slowest pace in more than a quarter-century, data showed.

Softness in the U.S. dollar and stabilization in some emerging markets has also helped improve investors' appetite for risk, analysts said.

The ICE Dollar Index was little changed Friday, on track to end the week 0.8% lower. Many emerging-market currencies have gained ground this week, with the Turkish lira rising around 5% as the central bank sharply raised interest rates. The Russian ruble rose 0.7% on Friday and around 3% for the week after Russia's central bank raised its key interest rate to 7.5% from 7.25%, ending a series of cuts.

Shoqat Bunglawala, head of the global portfolio solutions group for EMEA and Asia Pacific at Goldman Sachs Asset Management, said he is cautious on emerging markets in the short term because of issues largely stemming from market sentiment and volatility, but in the medium term is still very positive on broader emerging markets.

Many are in a substantially better position that they were a few years ago, he said, pointing to improvements in earnings growth and well-anchored inflation.

Investors were also watching U.S. retail sales figures on Friday, which showed American consumers reined in their spending in August, taking a breather after very strong sales growth in July.

A robust economy drove U.S. wages higher in August, data showed last week, with private-sector hourly wages growing 2.9% from a year earlier, the fastest pace since mid-2009.

"If that's not translating into retail spending, retailers will feel the brunt of that move" as it costs more to pay their employees, Mr. Cruz said.

Yields on 10-year German government bonds continued to climb, trading around 0.45% a day after the European Central Bank said it would press ahead with a plan to phase out easy money. Yields move inversely to prices.

Write to Riva Gold at riva.gold@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL 1.74% 25883.25 Delayed Quote.10.96%
NASDAQ 100 0.47% 7055.1793 Delayed Quote.11.46%
NASDAQ COMP. 0.61% 7472.4101 Delayed Quote.12.62%
NIKKEI 225 1.82% 21281.85 Real-time Quote.4.43%
S&P 500 1.09% 2775.6 Delayed Quote.10.72%
US DOLLAR INDEX -0.12% 96.78 End-of-day quote.0.10%
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