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New York - Global stocks rallied while the yen and government bonds slumped after US President Donald Trump promised a plan to overhaul business taxes in the next few weeks.
Equity markets in Europe and Asia advanced, sending the MSCI All-Country World Index to the highest level since June 2015, after US stocks climbed to records.
The dollar headed for its first weekly gain of the year and Treasuries retreated for a second day as Trump’s pledge revitalised trades that had begun to show signs of cracking. Chinese shares climbed as a trade report indicated overseas shipments rebounded on stronger global demand. Gold slipped while crude extended a rally to a third day.
Equities surged after Trump said a “phenomenal” plan to overhaul business taxes may be released within the next “two or three weeks.”
The comments served as a lifeline to so-called reflation trades that were weakening as the administration defended immigration orders and threatened to rewrite trade terms while providing scant details on pro-growth policies promised during the campaign.
Chinese data showed exports to the US rose 9% from a year ago in dollar terms, which could exacerbate concerns by the Trump administration about bilateral trade.
At the same time, Trump’s first phone call as president to counterpart Xi Jinping may help ease a key source of diplomatic tension between the world’s two largest economies, as he reaffirmed the US’s long-standing support for the ‘One-China’ policy.
What’s coming up in the markets:
Attention turns to Shinzo Abe’s visit to Washington, as investors parse reports Japan’s prime minister is prepared to offer infrastructure investment, with the U.S. administration still sitting on details of its own policy proposal.
Trump appears set to go to the Supreme Court over his ban on immigration after a San Francisco-based appeals court upheld a suspension of the order. The International Energy Agency and OPEC monthly reports are due on Friday and on Monday, respectively, providing the first full month of production data since the oil cartel’s supply deal.
Here are the main market moves:
Stocks
The Stoxx Europe 600 index advanced 0.2% at 10:10, rising for a fourth straight day and heading for the highest closing level in a year. ArcelorMittal gained 4.2% after the world’s largest steelmaker reported a 20% increase in annual profit on rising steel and iron ore prices.
The MSCI Asia Pacific Index jumped 0.9%, to the highest level since July 2015. Japan’s Topix rose 2.2%, the most since January 4, to bring it back above its average price for the past 50 days.
Australia’s S&P/ASX 200 Index climbed 1% for a fourth-straight gain and the best weekly performance since early December. Benchmarks in Singapore and Taiwan climbed at least 0.7%.
Malaysian shares rose to the highest level since April. Hong Kong’s Hang Seng added 0.2%, while the Hang Seng China Enterprises Index increased 0.5%, for a fifth straight gain to the highest since November 2015. Contracts on the S&P 500 increased 0.2% after the index rose 0.6% to a record 2 307.87 on Thursday. Airlines jumped 2.5% amid Trump’s promise to cut regulations on the industry.
Bonds
Treasuries fell, with 10-year yields rising two basis points to 2.42%. Yields gained six basis points on Thursday, halting a rally that took yields to the lowest in three weeks on a closing basis.
Germany 10-year bond yields increased two basis points while French yields increased five basis points. Australian bonds fell, sending 10-year yields up five basis points to 2.70%. New Zealand yields rose four basis points to 3.20%.
Currencies
The yen was down 0.5% to ¥113.80/$ after sliding 1.2% the previous session. The euro and British pound each fell 0.1%.
The Bloomberg Dollar Spot Index rose 0.2% after Thursday’s 0.3% advance, and is poised to snap a six-week losing streak. The world’s largest foreign-exchange trading firm sees the dollar rising this year even as the president talks the greenback down and blasts some of the nation’s biggest trading partners for currency manipulation.
Commodities
Oil rose less than 0.1% to $53.02 a barrel Friday after it climbed 1.3% the previous session. Output cuts from OPEC and other producing nations are seen clearing a global inventory glut. Gold fell 0.5% to $1 221.89 an ounce, after dropping 1.1% on Thursday.
The metal, which is considered a haven asset, was at a three-month high earlier in the week. Iron ore futures jumped 3.8% climbing more than 1% for a fourth straight day.
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