Global shares inch up amid lingering trade jitters

On Friday, global shares inched up, following China’s renewed offer to work out a trade pact with the U.S. However, the gains remained limited because of the lingering uncertainty.

The 16-month old trade war ha undermined the global economy.

Trade jitters have put MSCI’s index of global shares on course to snap a 6-week streak of gains. 

Also casting a pall on sentiments is the lackluster economic data and the rising political risks in the U.S. and Britain.

European share was modestly firmer at the opening. But, the rising off three-week lows touched on Thursday when it seemed that the U.S. legislation on Hong Kong would undermine trade talks.

The broader Euro STOXX 600 rose 0.77%.

Wall Street futures, too, were slightly firmer after China said it was willing to work the U.S. to resolve core trade concerns.

According to the Wall Street Journal, China invited U.S. trade negotiators for a fresh round of face to face talks in China.

But, uncertainties over a possible trade deal before the Dec 15 tariff hikes sets in restrained the markets.

“Markets are being held hostage by the news – positive or negative – coming out of the United States or China. Even if the phase one agreement materializes, there is no way I would believe that’s the end of the story; it will just move to German cars or Japanese exports,” said Marie Owens-Thomsen, the global economist at wealth manager Indosuez.

Concerns linger, with the U.S. President Trump, is expected to sign into law the two bills supporting Hing Kong protesters.

The U.S. House of Representatives voted 417-1 for the “Hong Kong Human Rights and Democracy Act“, – which the Senate had passed unanimously a day earlier.

“If he’s going to be forced to sign it, then it brings another (element) of uncertainty to this phase one trade deal, which then pushes back into next year,” said Matt Simpson, senior market analyst at GAIN Capital in Singapore.

But Simpson said that in the absence of significant news on trade, rangebound market moves are “quite reflective of the small headlines coming through.”

Chinese blue-chip shares closed 0.82% lower. Asian shares ex-Japan firmed 0.3% after the previous day’s steep falls. Yields on U.S. and German government bonds were a shade higher, with 10-year Treasury yields inching up to 1.7774%, up from its U.S. close of 1.772% on Thursday.

The global economy struggling to recover from its slowdown 

The failure to resolve the trade dispute means the world economy is struggling to recover from its slowdown. On Thursday, the Organisation for Economic Cooperation and Development forecast growth at a decade-low 2.9% this year and the next.

Weaker than expected data showing Eurozone business growth almost ground to a halt this month underscored the fragility. Activity in the dominant services industry increased at a much weaker pace than expected.

IHS Markit’s flash composite Purchasing Managers’ Index, seen as a reliable guide to economic health, was 50.3, down from October’s 50.6. It moved towards the 50 mark that separates growth from contraction.

In currency markets, the euro dipped into negative territory against the U.S. dollar after the release of the PMI data.

The USD was down less than 0.1% against a basket of currencies. It broke its three-day streak of gains heading for its smallest weekly change since the beginning of August.

Oil prices retreated after hitting two-month highs following a Reuters report that the Organization of the Petroleum Exporting Countries (OPEC) and its allies were likely to extend existing output cuts until mid-2020.

Global benchmark Brent crude was down 0.31% at $63.77 per barrel.

Spot gold edged up 0.2% to $1,467.26 per ounce.