Global Stocks Extend Rise as U.S. Considers Tariff Drawdown
18 Gennaio 2019 - 1:35PM
Dow Jones News
By Riva Gold
Expectations for easing trade tensions between the U.S. and
China continued to buoy stock markets Friday, putting most major
indexes on track to end the week higher.
Benchmarks in Europe, Japan, Shanghai and Hong Kong all climbed
over 1% on the day, while S&P 500 futures rose 0.4%, led by
gains in commodities companies.
The moves came after U.S. stocks rose for a third straight
session Thursday thanks to optimism the U.S. would ratchet back
tariffs on Chinese imports.
The Wall Street Journal reported that U.S. Treasury Secretary
Steven Mnuchin proposed the idea of lifting some or all tariffs on
Chinese imports to advance trade talks.
A Treasury spokesman said bargaining positions "are all at the
discussion stage" and that "neither Secretary Mnuchin nor
Ambassador Lighthizer has made any recommendations to anyone with
respect to tariffs or other parts of the negotiation with
China."
Trade friction had weighed on market sentiment in recent months
amid concerns about the impact it would have on economic growth and
corporate supply chains.
Kevin Gardiner, global investment strategist at Rothschild
Wealth Management, said that while longer term it is less clear
whether the outcome of the trade negotiations might be good or bad
for the U.S. economy, "anything which makes international trade
more difficult, that puts sand in the wheels of businesses and
disrupts their increasingly global supply chains has got to be bad
for business."
In Europe, the trade-sensitive auto sector was one of the best
performers Friday, rising 1.7% for the day and adding to gains of
8% this month after a bruising selloff in late 2018.
Shares of oil-and-gas companies also rose 1.6% Friday as Brent
crude, the global benchmark, rose 1.2% to $61.92 a barrel.
The broader Europe 600 rose 1.3% midday to around a six-week
high. The moves kept the pan-European index on track for weekly
gains alongside its peers in the U.S. and Asia, although the U.K.'s
multinational-heavy FTSE 100 lagged behind amid a strengthening
currency and ongoing uncertainty around Brexit.
Corporate earnings have also been a source of support for the
market this week and continued to drive moves in individual
companies on Friday.
Shares of Europe's Ryanair Holdings fell 2.2% after it lowered
its full-year profit guidance and said further cuts could be on the
way depending on how Brexit develops.
Rio Tinto was up 0.8% after the mining giant forecast a further
rise in exports in the year ahead.
In the U.S., shares of Netflix fell 2% in premarket trading
after the streaming-video giant said revenue grew less than
analysts expected. Shares of American Express also moved 1.7% lower
despite posting its highest annual profit and revenue.
Overall, 77% of S&P 500 companies reported earnings above
analysts' expectations through Thursday afternoon, compared with
64% in a typical quarter, according to data from Refinitiv.
That comes against a significantly lowered bar, however,
following steep downgrades to fourth-quarter and 2019 earnings
forecasts in recent weeks.
"Analysts' [earnings] revision momentum has gone off a cliff,"
said David Bowers, who heads up research at Absolute Strategy
Research. For stocks and the broader environment for risky assets
"we think we're not out of the woods yet," he said.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
January 18, 2019 07:20 ET (12:20 GMT)
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