Global Stocks Set to End Week on a High – Wall Street Journal

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  • Stocks shake off trade concerns
  • China’s trade surplus rises
  • Pound falls on Trump’s comments

Global stocks rose Friday and were set to close out the week in positive territory, putting aside a midweek selloff driven by concerns over trade.

The Stoxx Europe 600 was up 0.3% in European morning trade, led by gains among technology and auto companies. Futures markets pointed to a 0.1% opening gain for the S&P 500, and major Asian stock indexes finished the week higher.

Oil-and-gas companies lagged behind in Europe as Brent crude oil futures fell 1.3% to $73.48 a barrel. The global benchmark has declined nearly 5% this week amid concerns over resurgent Libyan supply.

Stocks dipped midweek after the Trump administration said it would move forward with plans to impose a 10% tariff on $200 billion of Chinese goods—the latest move in an escalating trade conflict between the world’s two largest economies.

Stocks have tended to bounce back quickly following periods of heightened trade tensions over the past 18 months, according to strategists at J.P. Morgan Asset Management. In the five days following announcements on trade, the total return on the S&P 500 has averaged around 1 percentage point, according to the firm’s analysis—after recording a loss of 0.3% on the day of the announcement. Recoveries in other stock markets have been slower, they added.

Later Friday, investors are set to turn their attention to earnings, with

Citigroup
,

JPMorgan Chase and

Wells Fargo

all due to report results.

Traders at the Frankfurt Stock Exchange.


Photo:

Alex Kraus/Bloomberg News

The absence of concrete earnings results has been “one of the reasons why there’s been such fixation on the trade discussion,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

Mr. Freedman said he would be watching closely what chief executives have to say about the impact of trade tensions on their businesses when they report second-quarter earnings. Analysts largely expect that earnings will be positive.

With the U.S. “carrying a large share of global economic growth right now,” how chief executives react to the uncertainty—whether or not they chose to continue hiring and investing—will play a large role in growth, Mr. Freedman said.

In currency markets, the British pound fell 0.6% against the dollar to $1.3126 after President Donald Trump told a U.K. newspaper that British Prime Minister

Theresa May’s

plan for Brexit could “kill” the nation’s chances of striking a bilateral trade deal with the U.S.

The WSJ Dollar Index, which measures the currency against a basket of 16 others, continued to strengthen, rising 0.4%.

In Asia, Hong Kong’s Hang Seng was up 0.2% and Japan’s Nikkei Stock Average rose 1.9%. The yen has fallen to its lowest point in dollar terms since January, which tends to boost Japanese exporters. In China, the Shanghai Composite Index fell 0.2%.

Commodities felt the pressure of trade tensions. Soybean prices fell to their lowest point in nearly a decade, following a U.S. Department of Agriculture report forecasting that Chinese tariffs will cut into exports. Copper futures were down 0.6%.

China’s trade surplus rose to $41.61 in June, up from $24.92 billion a month earlier. June’s increase, spurred by weak imports, was above the $26 billion surplus expected by economists polled by The Wall Street Journal. The trade surplus with the U.S. stood at $133.76 billion in the first half of the year, according to calculations by the Journal based on the official data.

Elsewhere, Brent crude oil prices declined 1.1% to $73.95 a barrel.

In bond markets, the yield on the 10-year U.S. Treasury note dipped to 2.843% from 2.853% Thursday. Yields fall as prices rise.