BCN-04, 05 Global stocks rise as pound gyrates on Trump Brexit comments

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Global stocks rise as pound gyrates on Trump Brexit comments

NEW YORK, July 14, 2018 (BSS/AFP) – US and European stocks rose modestly
on Friday with investors mildly hopeful that China and the US can still
settle their war over tariffs.

On currency markets, the pound slumped after US President Donald Trump
attacked UK Prime Minister Theresa May’s Brexit strategy but recovered after
he seemed to backtrack later in the day.

Equities have had a rollercoaster week, with strong US jobs figures
providing support before Trump threatened tariffs on another $200 billion of
Chinese imports, causing a large sell-off.

The markets have also been buoyed by optimism over second-quarter
earnings.

Still, analysts are cautious about the odds that the global economy will
skirt a value-destroying trade war, with Barclays warning Friday that “the
market’s benign narrative of this having limited economic consequence could
become challenged as trade cost effects cascade through global value chains.”

– Can they work it out? –

Beijing’s measured response to Trump’s midweek tariffs threat and
indications from both sides that they are willing to talk has instilled
trading floors with a little optimism heading into the weekend.

“The Chinese government, after initially reacting angrily, appears to be
calmly considering its options. The absence of an immediate tit-for-tat
response lends hope to the belief that China-US trade negotiations aren’t
completely off the table,” said a note from S&P Global Ratings on Friday.

US Treasury Secretary Steven Mnuchin on Thursday told lawmakers the White
House was “available” for discussions with China.

That came after China’s Vice Minister of Commerce Wang Shouwen said the
economic superpowers “should sit down and try to find a solution to this
trade problem.”

But in a development on Friday that could unsettle hopes of progress, data
showed that China’s trade surplus with the United States hit a record last
month.

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The imbalance is at the heart of Trump’s anger at what he describes as
Beijing’s unfair trade practices that are hurting American companies and
destroying jobs.

– ‘Dumped and trumped’ –

On currency markets Friday, sterling was hammered early in the session by
fresh concerns about May’s political future.

In an interview released Friday to coincide with Trump’s visit to Britain,
the president said the British prime minister’s plans for close future ties
with the EU would “probably kill” her hopes for a trade deal with the United
States.

Lukman Otunuga, Research Analyst at FXTM, said the pound had been “dumped
and trumped” at the end of what was already “a terrible trading week for the
British pound thanks to political instability at home and Brexit-related
uncertainty.”

Trump later seemed to want to take the edge off his earlier remarks,
saying “whatever you do is okay with us, just make sure we can trade
together, that’s all that matters.”

That helped sterling to recover to trade little changed on the day and in
turn weighed on London stocks, which are often boosted by a soft British
currency.

– Key figures at 2100 GMT –

New York – Dow: UP 0.4 percent at 25,019.41 (close)

New York – S&P 500: UP 0.1 percent at 2,801.31 (close)

New York – Nasdaq: UP less than 0.1 percent at 7,825.98 (close)

London – FTSE 100: UP 0.1 percent at 7,661.87 (close)

Frankfurt – DAX 30: UP 0.4 percent at 12,540.73 (close)

Paris – CAC 40: UP 0.4 percent at 5,429.20 (close)

EURO STOXX 50: UP 0.3 percent at 3,454.54 (close)

Tokyo – Nikkei 225: UP 1.9 percent at 22,597.35 (close)

Hong Kong – Hang Seng: UP 0.2 percent at 28,525.44 (close)

Shanghai – Composite: DOWN 0.2 percent at 2,831.18 (close)

Dollar/yen: DOWN at 112.35 yen from 112.55 yen at 2100 GMT

Euro/dollar: UP at $1.1686 from $1.1672

Pound/dollar: UP at $1.3236 from $1.3206

Oil – Brent Crude: up 88 cents at $75.33 per barrel

Oil – West Texas Intermediate: UP 68 cents at $70.33 per barrel

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