Global stocks climbed Friday, staging a partial rebound from Thursday’s steep losses

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By David Hodari |

Global stocks climbed Friday, staging a partial rebound from Thursday’s steep losses after China confirmed a two-day meeting with U.S. representatives to work to resolve the countries’ trade dispute.

The Stoxx Europe 600 climbed 0.9% in opening trading, buoyed by natural-resources and energy sectors, up 2% and 1.7%, respectively. Natural-resources stocks have been among those worst hit by trade disputes between the U.S. and China.

Meanwhile, oil prices continued the rise that began earlier this week when production cuts from the Organization of the Petroleum Exporting Countries and its allies came into effect. Brent crude oil was up 1.4% at $56.71 a barrel and West Texas Intermediate futures were up 1.6% at $47.82 a barrel.

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Markets were also upbeat in Asia, where the Shanghai Composite Index, the Shenzhen A-Share, and the Hang Seng all rose by more than 2%. Japan’s Nikkei returned to trading after a public holiday to drop 2.3% in a delayed reaction to losses across global markets earlier in the week.

In the U.S., futures put the tech-dominated Nasdaq Composite Index on course to rise 1.2% at the open, with the S&P 500 and the Dow Jones Industrial Average set to climb 0.9%.

China’s commerce ministry said a U.S. trade delegation led by Deputy Trade Representative Jeffrey Gerrish will visit China on Monday and Tuesday. The news provided some relief for equities markets, which faced pressure Thursday amid intensifying fears regarding the health of the global economy.

Tech stocks in particular were dragged lower Thursday, after Appleannounced a rare cut to its sales forecast. Investors took that news—which came after weak Chinese economic sentiment indicators Wednesday—as a signal of ebbing growth in the world’s number two economy. Most major benchmarks around the world were higher Friday, while other assets also reversed their moves from earlier in the week.

The Japanese yen relinquished some of its sharp Thursday gains and was last down 0.2% versus the U.S. dollar. The yield on 10-year U.S. Treasurys, meanwhile, was last up to 2.584% from 2.557% late Thursday. Yields rise as prices fall.

Despite equities’ late-week rally, investors remained concerned about the prospect of slowing growth, with U.S. auto sales figures on Thursday registering their sharpest drop since late 2008.

Market participants were awaiting nonfarm payroll numbers due out later Friday for further clues on the health of the U.S. economy. The figures will be parsed for their significance to Federal Reserve monetary policy, which has given investors cause for concern in recent months.

While 2018 closed amid expectations for a continuing path of Fed interest-rate increases, CME Group data last gave a 56% probability that interest rates will be lower than their current level by the end of January 2020.

Investors’ worries don’t appear to have been shared by the central bank, with Chairman Jerome Powell pointing to resilient U.S. economic data at his last policy announcement in December.

“The thing investors are wrestling with is this disconnect between a U.S. economy growing at a pretty good pace and valuations pricing in so much downside,” said Edward Park, deputy chief investment officer at Brooks Macdonald. “We have the feeling that markets aren’t likely to stay negative for an entire year if the economic data remains relatively upbeat.”

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