Global stocks rallied on Friday, as investors remain calm after the introduction of the new US tariffs and watched carefully the development of the trade talks.
The US increased tariffs from 10% to 25% on 200 billion USD worth of Chinese goods at 12:01 a.m. ET Friday. The markets across the globe initially fell on the back of the news but were quick to bounce back and trade higher. The recovery could be due to markets already calculated the tariff hike. The announcement on the increase initially came from Trump on Sunday, giving investors plenty of time to position assets in their portfolios.
Global stock markets have seen heavy selling this week with Dow Jones Industrial Average wiping out more than 650 points, while the S&P 500 has lost about 2.5%. Global equities have seen outflows of 20.5 billion USD in the past week, according to new research by Bank of America Merrill Lynch said on Friday.
Asian markets recap
Most of the Asia-Pacific stock exchanges ended today’s trading session into the green despite the Sino-American trade tension.
In China, the mainland index Shanghai Composite added 3.10% ending the day at a level of 2,939.21 points. Hong Kong’s benchmark Hang Seng grew by 310.82 points, or 1.10%, to 28,621.89 points. Washington raised customs duties on Chinese imports for goods with an annual turnover of 200 billion USD from 10% to 25% amid ongoing trade talks between the two most powerful economies in the world. In response, Beijing expressed “deep regret”, stressing that it would take retaliatory measures. Chinese Deputy Prime Minister Liu He arrived in Washington to continue trading talks with US negotiators, with investors still hoping an agreement between the two sides would still be reached. The stocks of Alibaba Group lost 0.31% of its value while those of China Telecom Corp rose by 1.70%.
On the Tokyo Stock Exchange, the blue-chip index Nikkei 225 fell by 0.27% to 21,344.92 points. The shares of the Japanese corporation SoftBank Group fell by 5.41% after it became clear that the CEO of the conglomerate, Masayoshi Son, officially confirmed the creation of a successor of the world’s largest technology fund Vision Fund. On the other hand, the shares of Toyota and Honda fell by 2% and 2.73%, respectively.
In South Korea, the index Kospi advanced by 0.29% to 2,108.04 points. The shares of Posco and SK Telecom erased 0.57% and 0.85%, respectively.
At the same time, Australian benchmark S&P ASX 200 rose 0.25% to 6,310.90 points. BHP Billiton and Westpac declined by 0.64% and 0.26% respectively.
European markets mid-session recap
European stocks opened higher Friday morning with major indexes trading into the green. European Union leaders agreed to prioritize fighting climate change, safeguarding democracy and finding a modern model for growth as they met to discuss the future course of the bloc in Thursday talks. Meanwhile, reports Thursday night revealed seven banks faced EU antitrust fines for rigging the multi-trillion dollar foreign exchange market. These included Barclays, Citigroup, HSBC, and J.P. Morgan.
German index DAX 30 inched higher by 1.09% to 12,104.61 points at 10:30 GMT. German delivery and supply chain giant Deutsche Post reported that its first-quarter operating profit surged 28% to 1.2 billion EUR. Its share price was fractionally down in morning trade, but later recovered and trading with an increase of 0.62%. German food processing technology firm Gea Group was a strong early performer, climbing 9% on the back of a positive set of results. Thyssenkrupp shares were also up 16% and set for their best day in 10 years after Reuters reported the company is considering a partial listing of its elevator business.
French index CAC 40 is up by 41.72 points, or 0.79%, to 5,354.87 points. The stocks of Airbus rose by 0.4%, while financial companies have stronger gain with BNP Paribas adding 1.2% in mid-session deals.
London’s main index jumped as investors held out for a resolution to the Sino-US trade dispute even as higher US tariffs on more Chinese goods took effect, and airline group IAG rose by 3.25% after in-line first-quarter results. The blue-chip index FTSE 100 inched higher by 0.5% to 7,242.77 points. AstraZeneca slipped 1.3% after an anemia treatment developed by the company and its partners did not show a meaningful difference in risk of major adverse cardiac events against Pfizer’s approved drug. Thomas Cook gained 5.5% after a Sky News report on Thursday that Virgin Atlantic had tabled an offer for the tour operator’s long-haul unit.
Wall Street pre-session recap
Futures on the Dow Jones Industrial Average turned positive on Friday. At 6.40 a.m. ET, Dow futures were up 11 points, implying a higher open of about 14 points. The S&P 500 and Nasdaq were also set to open slightly higher.
The Cboe Volatility Index, a measure of the 30-day implied volatility of the S&P 500 commonly known as Wall Street’s “fear gauge”, hit its highest level since January 4 on Thursday.