Monday, 23 September 2019 07:28 GMT

Stock markets rise at end of turbulent week

(MENAFN - Gulf Times) Global stock markets rose yesterday 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.
Yesterday, 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 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.
The three main Wall Street indexes extended gains after a report that Germany's right-left coalition government would be prepared to ditch its balanced budget rule and take on new debt to counter a possible recession.
'This is huge news from a European perspective, said Brad McMillan, chief investment officer of Commonwealth Financial Network in Waltham, Massachusetts.
'One of the major constraints on ECB action has been the German position and for this to change domestically certainly is going to help.
The report added to sentiment after China's state planner said it would roll out a plan to boost disposable income this year and in 2020 to spur consumption as the economy slows.
Investors are also expecting further interest rate cuts from the Federal Reserve.
However, the three main indexes are still set to rack up their third consecutive week of losses, on worries of a recession and US-China trade tensions.
Cathay Pacific yesterday 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 FTSE 100 closed 0.7% up at 7,117.15 points, the DAX 30 closed 1.3% up at 11,562.74 points and the CAC 40 ended 1.2% higher at 5,300.79 points, while the EURO STOXX 50 finished 1.4% higher at 3,328.32 points.
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.


Stock markets rise at end of turbulent week


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