Stocks extend recovery as pound slides on Trump attack

LONDON: Global stock markets rose on Friday with investors once again hopeful that China and the US could settle their war over tariffs.

On currency markets, the pound slumped after US President Donald Trump attacked UK Prime Minister Theresa May’s Brexit strategy.

Equities have had a rollercoaster week, with strong US jobs figures providing support before Trump’s threatened tariffs on another $200 billion of Chinese imports causing a large sell-off.

Stock markets have recovered over the past two days.

“Equities are steadily gaining” noted Chris Beauchamp, chief market analyst at traders IG. “Of course, the path higher has been made much easier by the absence of any trade war comments, tweets or observations.”

– Can they work it out? –

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Beijing’s measured response to Trump’s tariffs threat and indications from both sides that they are willing to talk has instilled trading floors with a little optimism heading into the weekend.

“Trade war concerns was a key talking point again and a major concern amongst economists, politicians and central bankers. However, market participants have on the whole been evidently less concerned about it all,” said Fawad Razaqzada at Forex.com.

US Treasury Secretary Steven Mnuchin on Thursday told lawmakers the White House was “available” for discussions with China.

That came after China’s Vice Minister of Commerce Wang Shouwen said the economic superpowers “should sit down and try to find a solution to this trade problem”.

But in a development Friday that could unsettle hopes of progress, data showed that China’s trade surplus with the United States hit a record last month.

The imbalance is at the heart of Trump’s anger at what he describes as Beijing’s unfair trade practices that are hurting American companies and destroying jobs.

– ‘Dumped and trumped’ –

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On currency markets Friday, sterling was hammered by fresh concerns about May’s political future.

In an interview released Friday to coincide with Trump’s visit to Britain, the president said the British prime minister’s plans for close future ties with the EU would “probably kill” her hopes for a trade deal with the United States.

He told The Sun tabloid it was not what Britons backed when they voted in a June 2016 referendum to quit the European Union, adding that former foreign minister Boris Johnson, who resigned this week over the Brexit plan, would make “a great prime minister”.

Lukman Otunuga, Research Analyst at FXTM, said the pound had been “dumped and trumped” at the end of what was already “a terrible trading week for the British pound thanks to political instability at home and Brexit-related uncertainty”.

The pound now stands around 7.5 percent lower against the dollar than three months ago,

– Key figures at 1335 GMT –

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London – FTSE 100: UP 0.4 percent at 7,683.27 points

Frankfurt – DAX 30: UP 0.5 percent at 12,554.30

Paris – CAC 40: UP 0.5 percent at 5,431.11

EURO STOXX 50: UP 0.4 percent at 3,458.19

New York – Dow: UP 0.2 percent at 24,965.82

Tokyo – Nikkei 225: UP 1.9 percent at 22,597.35 (close)

Hong Kong – Hang Seng: UP 0.2 percent at 28,525.44 (close)

Shanghai – Composite: DOWN 0.2 percent at 2,831.18 (close)

Dollar/yen: DOWN at 112.52 yen from 112.53 yen at 2100 GMT