Global Stocks Extend Rise as U.S. Considers Tariff Drawdown

By Riva Gold 

Expectations for easing trade tensions between the U.S. and China continued to buoy stock markets on Friday, putting most major indexes on track to end the week higher.

The Stoxx Europe 600 rose 1.1% to around a six-week high after stock markets in Japan, Shanghai and Hong Kong closed up over 1%. S&P 500 futures rose 0.3%.

The moves came after U.S. stocks rose for a third straight session Thursday thanks to optimism the U.S. would ratchet back tariffs on Chinese imports.

The Wall Street Journal reported that U.S. Treasury Secretary Steven Mnuchin proposed the idea of lifting some or all tariffs on Chinese imports to advance trade talks.

Trade friction had weighed down market sentiment in recent months amid concerns about the impact it would have on economic growth and corporate supply chains.

A Treasury spokesman said bargaining positions "are all at the discussion stage" and that "neither Secretary Mnuchin nor Ambassador Lighthizer has made any recommendations to anyone with respect to tariffs or other parts of the negotiation with China."

In Europe, the trade-sensitive auto sector was one the best performers Friday, rising 1.6% for the day and adding to gains of 7.8% this month after a bruising selloff in late 2018.

Shares of oil-and-gas companies also rose 1.6% Friday as Brent crude, the global benchmark, gained 1% to $61.77 a barrel.

The moves kept the pan-European index on track for weekly gains alongside its peers in the U.S. and Asia, although the U.K.'s multinational-heavy FTSE 100 lagged behind amid a strengthening currency and ongoing uncertainty around Brexit.

Corporate earnings have also been a source of support for the market this week and continued to drive moves in individual companies on Friday.

Shares of Europe's Ryanair Holdings fell 1.7% after it lowered its full-year profit guidance and said further cuts could be on the way depending on how Brexit develops.

Rio Tinto was up 0.5% after the mining giant forecast a further rise in exports in the year ahead.

In the U.S., shares of Netflix fell in premarket trading after the streaming-video giant said revenue grew less than analysts expected. Shares of American Express also moved lower despite posting its highest annual profit and revenue.

Overall, 77% of S&P 500 companies reported earnings above analysts' expectations through Thursday afternoon, compared with 64% in a typical quarter, according to data from Refinitiv.

That comes against a significantly lowered bar, however. "Analysts' [earnings] revision momentum has gone off a cliff," said David Bowers, who heads up research at Absolute Strategy Research. For stocks and the broader environment for risky assets "we think we're not out of the woods yet," he said.

Write to Riva Gold at [e-mail]

(END) Dow Jones Newswires

January 18, 2019 05:37 ET (10:37 GMT)

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