NVDA Q3 Earnings Alert: Why our AI stock picker is still holding Nvidia stockRead More

GLOBAL MARKETS-China bounce pushes world shares toward 6-month high

Published 2018-08-07, 06:00 a/m
© Reuters.  GLOBAL MARKETS-China bounce pushes world shares toward 6-month high
EUR/USD
-
USD/TRY
-
UK100
-
US500
-
FCHI
-
DE40
-
SOGN
-
HG
-
LCO
-
SXEP
-
SXPP
-

* World shares near 6-month high as China shares shine

* Turkish lira bounces 1.7 pct after Monday drubbing

* Euro, pound tick higher as dollar eases

* Oil prices drift higher on Iran sanctions

By Marc Jones

LONDON, Aug 7 (Reuters) - World shares edged toward a six-month high on Tuesday, as the biggest jump in Chinese stocks for over two years and an upbeat start for Europe followed Wall Street's best close since January.

The moves came despite a host of simmering global feuds. Oil prices ticked higher as the United States reimposed some sanctions on Iran, while the Turkish lira TRY= bounced back almost 2 percent from its worst day in a decade on Monday that had been prompted by a row with Washington. .IS

The mood lifted overnight as Chinese stocks rebounded 2.7 percent on hopes of fresh government spending, following a four-day selloff that had knocked them down about 6 percent. .SS

London .FTSE , Paris .FCHI and Frankfurt .GDAXI followed by rising 0.6 to 0.9 percent as Europe's investors cheered results from Italy's biggest bank UniCredit .EU and oil firms and miners gained on the rise in crude prices. .SXPP .SXEP

"The Chinese have stabilised the yuan, the lira hasn't been annihilated this morning so once the sharp FX moves have calmed down and as long as the (company) earnings are good, you have a more risk friendly environment," said Societe Generale (PA:SOGN) strategist Kit Juckes.

Currency markets remained volatile although less so than in recent sessions as the dollar dipped.

The euro bounced to $1.1583 EUR= from a near six-week low despite a second day of disappointing German economic data, while Britain's pound GBP= made back some ground after Brexit worries had pushed it to an 11-month low. /FRX

Turkey's lira recovered 1.7 percent from Monday's losses of more than 5 percent after Washington had moved to end duty-free access to U.S. markets for some Turkish exports. A report by CNN Turk that Turkish officials would go to Washington to discuss the strained relations helped the rise, although the lira remains close to a record low.

Already struggling with inflation at 14-year highs near 16 percent and political pressure on the central bank not to raise interest rates, the lira's year-to-date losses are nearing 30 percent as jitters about foreign currency debt payments rise.

"Currently the impact of the lira's slide is mostly contained within the country. But fears of a default will begin to increase if the currency keeps depreciating," said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities. "Such a development could affect some European financial institutions," he added.

WALL STREET WHOOSH

An impressive global earnings picture and upgrades to the U.S. profit growth horizon outweighed the global trade tensions and the various emerging market dislocations.

Wall Street's S&P 500 closed at its highest level since Jan. 29 overnight, less than 1 percent from its record high hit earlier that month.

The Vix volatility gauge closed at its lowest since Jan. 26. A surge in U.S. corporate earnings driven by tax cuts - they achieved an annual aggregate growth rate of about 25 percent in the second quarter - has prompted the likes of Citi to upgrade their end-2018 and 2019 earnings forecasts.

Wall Street buoyed market sentiment around the world, with Tokyo and Seoul both up 0.6 percent and Hong Kong closing up more than 1 percent along with Shanghai's big bounce.

In commodities, oil extended the previous day's rally after the imposition of U.S. sanctions against major crude exporter Iran took effect on Tuesday. O/R

Benchmark Brent crude oil futures LCOc1 shook off earlier weakness and were 0.33 percent higher at $73.99 a barrel. They had gained 0.75 percent on Monday after OPEC sources said Saudi production had unexpectedly fallen in July.

On bond markets, borrowing costs for euro zone benchmark issuer Germany were pinned near their lowest levels in almost two weeks as concerns about global trade and turbulence in Italy continued to support demand for the least risky assets. GVD/EUR

The softer dollar helped metals. Copper CMCU3 was up 0.5 percent at $6,161.50 a tonne after retreating more than 1 percent the previous day. Gold, which is stuck near a one-year low, crawled 0.2 percent higher to $1,208.06 an ounce MET/L

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.