World stocks have hovered around their highest prices in six weeks after a US trade deal with Britain fuelled guarded optimism for progress in tariff talks with other countries.
MSCI’s broadest index of world shares gained 0.1 per cent on Friday after jumping about 0.8 per cent the previous day to levels seen just before Trump’s “Liberation Day” global tariff announcements.
“The deal between the US and UK was more style over substance,” said Kyle Rodda, a senior financial markets analyst at Capital.com.
The “general terms” agreement leaves in place a 10 per cent tariff on goods imported from the UK but lowers prohibitive US duties on UK car exports. Britain agreed to lower its tariffs to 1.8 per cent from 5.1 per cent and provide greater access to US goods.
“However, it feeds the narrative that the US is looking to bang out rapid-fire trade deals and reduce tariffs – at the margins – and other trade barriers,” Rodda said.
Last week, Trump said he has “potential” trade deals with India, South Korea and Japan.
Trump pushed back against seeing the UK deal as a template for other negotiations, perhaps, including those due Saturday when US Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China’s economic tsar He Lifeng in Switzerland.
European stock markets opened higher on Friday.
The pan-European STOXX 600 index rose 0.4 per cent, with all regional bourses trading higher.
An investor rush from safe assets such as government bonds into riskier ones such as stocks might meant markets are getting ahead of themselves on optimism, said James Rossiter, head of global macro strategy at TD Securities.
“The trade deal isn’t really a trade deal. It’s an agreement on a few narrow topics. Still, it shows there is a degree of movement and that some tariffs could be mitigated,” Rossiter said.
Even so, “tariffs are not going away”.
Reaction to the UK trade agreement yesterday and the optimistic trade figures that emerged yesterday from China have pushed markets higher temporarily, but “the fundamentals behind what markets are seeing are not as robust”, Rossiter said.
Safe-haven German Bund prices fell on Friday, driving yields 5.2 basis points higher as investors dropped their bonds for assets with higher returns.
Bitcoin soared to the highest since January and US crude ticked up after a more than three per cent surge on Thursday.
Brent crude added 85 cents to $US63.70 a barrel following Thursday’s 2.8 per cent rally.
NYMEX US crude skipped up 84 cents to $US60.76 a barrel on Friday, building on the previous day’s surge.
The US dollar index, which measures the currency against six major peers, edged away from Thursday’s one-month peak to be down 0.3 per cent.
The euro rose from its one-month trough at $US1.1257, and sterling ticked up 0.2 per cent to $US1.3270.
Mainland China blue chips closed down 0.2 per cent, while Hong Kong’s Hang Seng ended 0.4 per cent higher.
Japan’s Nikkei soared 1.6 per cent and Taiwan’s equity benchmark advanced 1.8 per cent, with technology shares the strongest performing sector.
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