LONDON, Aug 17, 2019 (BSS/AFP) – Global stock markets rose on Friday as
investors put economic growth fears and trade jitters to one side, deciding
that they had had enough drama and losses for one week.
“We’re ending a turbulent week on a more positive note as exhausted
traders the world over head into the weekend in a more buoyant mood,” said
Craig Erlam, senior market analyst at the Oanda trading group.
Equities have had a volatile five days, during which US-China trade talk
hopes came and went and economic data pointed to a possible worldwide
downturn.
The Dow on Wednesday suffered its worst one-day fall of the year, before
recovering slightly on Thursday, reassured by strong US retail sales and
Walmart earnings.
On Friday, it continued to recover throughout the New York morning as
investors found relief in hope for progress in the US-China trade war, and
housing data offered enough good news not to ruin the party.
– The spooky yield curve –
The week’s most nerve-wracking event was a so-called inversion of the
yield curve in the US debt market that Erlam said “has spooked a lot of
people this week”.
The yield on the 10-year US Treasury bond slid Wednesday below the yield
on the two-year note, meaning short-term interest rates were higher than
longer-term ones.
The so-called “inversion” phenomenon is viewed by markets as a reliable
harbinger of recession.
Economists have warned for months that trade tensions would drag down
sentiment, which was already suffering owing to China’s economic slowdown and
fears of Brexit’s impact on Britain and Europe.
The tensions have hit global demand with data this week showing China’s
industrial output had plummeted to a 17-year low. Pro-democracy protests in
Hong Kong were adding to the negative sentiment.
– Pound creeps higher –
Cathay Pacific on Friday announced the shock resignation of its chief
executive Rupert Hogg, days after the Hong Kong carrier was censured by
Beijing because some staff had supported pro-democracy protests in the city.
Paul Loo, Cathay’s chief customer and commercial officer, also resigned.
Until recently Cathay had been celebrating a turnaround in fortunes after
Hogg initiated a three-year cost cutting programme.
Elsewhere Friday, the opening of London’s benchmark FTSE 100 shares was
delayed nearly two hours by a software problem, the London Stock Exchange
said.
“London Stock Exchange experienced a technical software issue this morning
that affected trading in certain securities, including FTSE 100 and (second-
tier) FTSE 250 stocks,” said a statement.
The pound meanwhile continued its recovery, “aided by a series of better-
than-expected (UK) economic releases in recent days”, helping to offset
Brexit uncertainty, according to David Cheetham, chief market analyst at XTB
trading group.
The euro recaptured some of its early losses against the dollar after
magazine Der Spiegel said that the German government was ready to boost
public spending to head off any coming recession.