Sat, Jul 07, 2018 – 7:05 AM
[NEW YORK] Global stock markets advanced on Friday, overcoming earlier wobbles prompted by China and the United States firing opening salvos in a trade war that pits the world’s two biggest economies against each other.
Wall Street gained on the back of a solid US employment report that was strong enough to reassure investors of the health of the economy, but did not exhibit robust enough wage growth to suggest the Federal Reserve will need to raise interest rates more aggressively.
All three major US indices ended higher, with the Nasdaq chalking up its second straight gain of more than one per cent.
European markets finished modestly higher, even as trade worries remained investors the biggest concern, dealers said.
US President Donald Trump on Friday rolled out 25 per cent tariffs on US$34 billion of Chinese goods in what Beijing called the “largest trade war” in economic history.
China said it was hitting back with retaliatory measures on US goods but did not immediately providing precise details on what products would be targeted in the first wave.
IMPACT ‘LIMITED FOR NOW’
“Trump is bringing the world close to a genuine trade war,” said Holger Schmieding, chief economist at Berenberg.
But in the end, European and US markets followed the example of Asian markets which gained as investors went bargain-hunting, dealers reported.
Tokyo stocks led the gains in Asia, closing 1.1 per cent higher, with markets in Shanghai and Hong Kong up by around half a percentage point.
Li Daxiao, analyst at Yingda Securities, said news of the tariffs had already been priced in.
“After the US tariffs announcement, the negative news finally came out and has already been digested over recent weeks. Therefore investors are not in as much of a panic as before, and the market sentiment will reverse,” Mr Li said.
Stanley Chik, from Bright Smart Securities International in Hong Kong, said “the impact of tariffs on economic growth appears limited for now, giving the market a breathing spell.”
But these could be just the first skirmishes in a long war, with financial markets worried about a knock-on effect on the wider global economy and the broader trading system.
Mr Trump has threatened to impose tariffs on as much US$450 billion annual Chinese imports – virtually all of China’s exports to the US – as he seeks to advance his “America First” protectionist agenda.
Beijing has accused the US of “firing on the whole world” with the measures, pointing out that most of the Chinese goods under attack are made by companies with large foreign investment – including American.
KEY FIGURES AROUND 2030 GMT
New York – Dow: UP 0.4 per cent at 24,456.48 (close)
New York – S&P 500: UP 0.9 per cent at 2,759.82 (close)
New York – Nasdaq: UP 1.3 per cent at 7,688.39 (close)
London – FTSE 100: UP 0.2 per cent at 7,617.70 points (close)
Frankfurt – DAX 30: UP 0.3 percent at 12,496.17 (close)
Paris – CAC 40: UP 0.2 per cent at 5,375.77 (close)
EURO Stoxx 50: UP 0.2 per cent at 3,446.66 (close)
Hong Kong – Hang Seng: UP 0.5 per cent at 28,315.62 (close)
Tokyo – Nikkei 225: UP 1.1 per cent at 21,788.14 (close)
Shanghai – Composite: UP 0.5 per cent at 2,747.23 (close)
Euro/dollar: UP at US$1.1744 from US$1.1691 at 2100 GMT Thursday
Pound/dollar: UP at US$1.3281 from US$1.3222
Dollar/yen: DOWN at 110.43 yen from 110.64 yen
Oil – Brent Crude: DOWN 28 cents at US$77.11 per barrel
Oil – West Texas Intermediate: UP 86 cents at US$73.80 per barrel