By Iain Withers and Kevin Buckland
LONDON/TOKYO (Reuters) – Global shares edged higher on Friday, spurred by a rally in Chinese stocks on Beijing’s latest policy steps to boost demand and also supported by robust U.S. economic data out this week.
MSCI’s index of global stocks edged up around a quarter of a percent, with tentative gains for European stocks. S&P 500 and Nasdaq futures were also up 0.2% and 0.5% ahead of the Wall Street open.
Mainland Chinese blue chips had closed up 3.6%, their biggest daily gain in eight sessions, after the country’s central bank launched two schemes aimed at boosting stocks. Weak data on China’s economy helped keep sentiment in check.
Investors remain alert to potential market volatility, with war in the Middle East still looming large and the U.S. presidential election fast approaching. Several so-called ‘Trump trades’ have gained momentum in recent days as markets shorten the odds of a potential Donald Trump victory.
Traditional safe haven gold hit a fresh all-time high on the day, breaking above the $2,700 mark for the first time.
Third quarter earnings from major companies next week could also help set the tone for markets, after mixed results from a string of U.S. and European blue chips in recent days.
“(Have we had) higher rates for too long? That is very much on people’s radar. There’s a bit of a worry about aggregate demand,” said Ross Yarrow, managing director of U.S. Institutional Equities at investment bank Baird.
Payrolls data due on Nov. 1 is likely to be the next big test for sentiment on the U.S. economy, Yarrow added.
The U.S. dollar index hovered close to an 11-week high versus major peers on the day, dipping slightly to 103.64, after climbing to 103.87 on Thursday for the first time since Aug. 2.
Data on Thursday showed U.S. retail sales rose a stronger-than-expected 0.4% last month, while a separate report showed initial jobless claims had dropped.
The 10-year U.S. Treasury yield stood at 4.1025%, little changed from Thursday, when it jumped 8 basis points.
ECB RATE CUT
The European Central Bank cut rates by a quarter point on Thursday, as expected. Some ECB governors at Thursday’s rate-setting meeting made the case for dropping a pledge to keep policy tight as inflation may now turn out lower than anticipated only a few weeks ago, five sources told Reuters.
The euro edged up 0.1% to $1.0844 after sliding to $1.0811 in the previous session, the lowest since Aug. 2.
Sterling gained 0.2% to $1.3044, after data showed British retail sales unexpectedly rose in September.
The Bank of Japan said on Friday it must focus on the economic impact of unstable markets and risks from overseas, suggesting the central bank was in no rush to raise interest rates further.
The dollar eased by 0.1% to around 150 yen, after breaking above the psychologically significant 150 barrier overnight for the first time since Aug. 1.
Oil prices were headed for their biggest weekly loss in more than a month on worries of lower demand.
Brent crude futures and U.S. crude futures both fell about 0.5%, to $74.08 and $70.34 a barrel respectively. [O/R]
(Reporting by Iain Withers in London and Kevin Buckland in Tokyo; Additional reporting by Ankur Banerjee; Editing by Jamie Freed, Kim Coghill, Lincoln Feast, Susan Fenton and Gareth Jones)
