Global stocks jump in the lull of trade tensions

LONDON (Reuters) – Global equities rallied sharply on Friday, as the Asian markets 'rally was extended to European equities after a week of rough sales, investors' fears of rising barriers becoming a reality.

The MSCI global equity index rose 0.5% to 0800 GMT, its strongest gain in three weeks, but its second quarter is expected to be in the red as investors expect on US next week rates.

The US administration is expected to activate rights on Chinese goods worth $ 34 billion on July 6, which should give rise to a response from Beijing.

European equities rebounded sharply, with the pan-European STOXX 600 up 1.2% and the German trade-sensitive DAX 1.5%.

But trade wars have already cut the Chinese yuan's holdings of European auto stocks and erased $ 1.75 trillion in market capitalization since June 12.

The euro jumped after leaders of a European summit reached a deal on migration, up 0.5 percent to $ 1,1622 at 0800 GMT.

"The result of the summit tells us something about the seriousness of the situation," said Jan von Gerich, chief analyst at Nordea in Helsinki.

"I'm not sure that this will solve the underlying problems, but we feared that the summit would fail and that the German government would collapse, so that the risk premium would be calculated," he said. declared. While Asian equities rose, the Chinese yuan experienced its worst month in a row, losing 3% against the dollar in June as investors pulling money from a market likely to suffer from higher trade barriers.

The Chinese yuan was traded Friday at 6.6441 for one dollar, its lowest since November. It has traded at 6.6211 for the dollar around 0800 GMT.

Chinese stocks rebounded from the lows of the last two years, helped by news that Beijing would release the brakes on foreign investment in sectors such as banking, auto, auto insurance 39, heavy industry and agriculture.

But despite Friday's gains, the CSI300 and Shanghai Composite are the best performers in the world this year.

Contrasting sharply with the yuan, the US dollar posted its strongest quarterly gains since the fourth quarter of 2016, helped by the US Federal Reserve's decision to raise interest rates in June and new forecasts. increases this year.

The dollar index edged down 0.5% to 94.924 and was up 0.1% from the yen to 110.65.

European bonds diverged, with the EU summit's migration deal pushing German Bund yields higher as yields on 10-year Italian government bonds fell at a trough of a week.

The yield on 10-year treasury bills reached 2.857% and the yield curve widened slightly to 33.3 basis points.

Many investors believe that its flattening will hit record lows as a recession could be imminent.

The intensification of fears over commercial rates contrasted with a still strong image of the global economy and robust growth in corporate profits.

"Our vision for this year is that asset markets are likely to underperform the real economy, as sustained growth, tighter financial conditions, higher inflation, and increased volatility would hurt investment returns. valuations even if BPA trends remain strong ". Analysts at Morgan Stanley lowered their benchmark targets for MSCI Europe on Thursday.

Oil prices were also under pressure from trade frictions, down despite crude market conditions that pushed prices to three-and-a-half-year highs on Thursday.

U.S. crude was 0.4% lower at $ 73.19 per barrel. Brent rose 0.2% to 78.01 dollars per barrel.

Gold remained near the lows of six and a half months, weighed down by trade concerns, interest rate expectations and the strength of the dollar.

Spot gold was up 0.2% to $ 1250.78 an ounce, but he was still heading toward his worst monthly performance since November 2016. [GOL]

emerging equities jumped 1.6%. The index was set for its worst month since January 2016, as the rising dollar beat the emerging economies.