World stocks hit a one-week high on trading hopes, yuan softens By Reuters

By Karin Strohecker

LONDON (Reuters) – Global equities on Friday hit their highest level of the week, hoping for a closer trade between Beijing and Washington, although a perky dollar has capped gains with the Chinese yuan, which is expected to rise sharply. is further weakened, on the way to know its weakest month in 2- 1/2 decades.

For most of August, global equities faltered and fixed-income securities reflected heightened global trade concerns and the obvious signs of a slowdown, if not a recession, in the global economy. global economy that threatened the financial markets.

The atmosphere calmed after US President Donald Trump said trade talks were taking place Thursday with China, and further talks were scheduled. The Chinese Ministry of Commerce also said that a series of meetings in September was being discussed between the two sides, but added that it was important that Washington cancel a tariff increase.

The MSCI All-Country World Index climbed 0.3%, but is expected to fall by nearly 3% in August. This is only the second month that the index has gone into the red this year. This is the weakest August for the index since 2015.

European equities extended Friday's gains from the previous session, as the pan-European index rose 0.3% to trade at a new one-month high.

"The war of commercial war has certainly retreated in favor of riskier assets at the moment, with Trump and China supposed to hold a call yesterday," he said. German Bank (FROM 🙂 Jim Reid strategist.

Gains were boosted by the booming German property companies, which saw their country rise by 0.7%.

Chart: Stocks in August – https://fingfx.thomsonreuters.com/gfx/mkt/12/5433/5383/stocks%20in%20Aug.png

The situation was more mixed in Asia, where the Chinese and Hong Kong stock markets plunged into the red. The arrests or detentions of pro-democracy activists in Hong Kong have exacerbated investors' anxiety, with the Chinese-controlled territory facing its first recession in 10 years.

Japan added 1.2%, while South Korea jumped 1.8%.

US futures have announced a stronger start to the day, with E-Minis for the S & P500 up 0.3% after gaining more than 1% on Wall Street.

The fixed income markets took a breather on Friday, at the end of a stellar month in which prices rallied and borrowing costs pushed further and further into negative territory.

US Treasury bond yields rose overnight, as the 10-year Treasury benchmark rose to 1.5349% from a low of 1.443% at the start of the week.

It was still below the two-year yields at 1.5419%. Such a reversal was last observed in 2007 and correctly predicted the Great Recession that followed a year later.

Eurozone government bond yields were close to their lows, while data showed that bloc inflation remained weak at 1.0% in August, well below the lows of the euro zone. objective of the European Central Bank and reinforcing the recovery expectations of the European Central Bank in September.

Germany is considering lowering its corporate tax rate, while the US government is considering issuing 50- and 100-year bonds to strengthen the yield curve.

Recent economic data has also highlighted a slowdown in global growth, with business investment, manufacturing activity and exports all heading south in major economies.

Investors focused on a series of economic publications expected this weekend, including the official China manufacturing survey, which would give a good idea of ​​the real impact of the Sino-US trade war.

GLUM YUAN

On the currency markets, the dollar hit a one-month high of 98.609 against a basket of six major currencies.

Still, commercial optimism did not inspire the Chinese yuan, which resumed its decline with a spot yuan to 7.1462 against a dollar. The currency is on its way to its weakest month since Beijing's monetary reform in 1994, after crossing key threshold 7 to reach the dollar level earlier in August.

"The decline of the yuan to 7 and beyond has been a distinct possibility for months, and it is clearly falling because of the tariffs," said Neil Mellor, chief foreign exchange strategist at BNY Mellon in London.

"This helps them to some extent to absorb the costs of customs duties – it's one of the few options they have.The tax option is limited after years of excesses , and the monetary stimulus plan is already unprecedented this year. "

The Australian dollar, often seen as an indirect bet on the Chinese economy, has slipped to a 10-year low.

Elsewhere, the euro fell to its lowest level in a month against the dollar, as investors sought aggressive easing by the European Central Bank and ignored the doubts of some policymakers about the need for money. An increased stimulus.

The Japanese yen rose to 106.40 for a dollar, while the euro fell 0.2% to $ 1.10395.

The pound sterling remained stable at $ 1.2182 against the dollar, in anticipation of a few crucial days for parliament next week, which could even lead to a vote of no confidence and new elections.

In commodities, recent highs stood at $ 1,526 an ounce. The money was at $ 18.37 an ounce after reaching its highest level in over two years.

slipped 57 cents to 56.14 dollars a barrel and 30 cents to 60.78 dollars a barrel.