Global stocks hit a record high, as pound endures torrid week
- Global stocks hit a record high as trading wound down before the year-end holidays
- European shares led the way, with the broad Euro STOXX 600 gaining 0.3% in early trading.
- sterling steadied after suffering a sharp reversal that left it facing its worst weekly fall since late 2017 at 2.4%.
On Friday, Global stocks hit a record high as trading wound down before the year-end holidays. The GBP headed towards its worst week for more than two years amid renewed worries about Brexit.
MSCI’s world equity index, which tracks shares in 49 countries, gained a smidgeon to 561.31, bettering a record touched on Thursday as optimism infused markets after phase one China-US deal.
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The MSCI index is on track to advance more than 1% this week, in what would be its fourth straight week of gains.
European shares led the way, with the broad Euro STOXX 600 gaining 0.3% in early trading.
Indexes in Frankfurt, Paris, and London all made similar gains.
However, Shell shares fell 0.6% after it said it expects impairment charges of up to $2.3 billion in the fourth quarter and trimmed its forecast for quarterly oil production sales.
On Wall Street, e-mini futures for the S&P 500 slipped a touch but were near all-time highs, having risen more than 1% in the week.
MSCI’s broadest index of Asia-Pacific shares outside Japan was steady after rising 1.2% so far this week and almost 5% this month.
Underscoring that the trade war issue is at rest, for now, U.S. Treasury Secretary Steven Mnuchin said the U.S. and China would sign their Phase One trade pact in early January.
Mnuchin said the documentation was finished and undergoing a technical “scrub,” though Beijing has so far dodged all details of the deal.
The U.S. House of Representatives also overwhelmingly approved a new North American deal that leaves $1.2 trillion in annual U.S.-Mexico-Canada trade flows mostly intact.
Market players were already beginning to look at what the next steps for the US-China saga will be in the new year.
“The focus will be on what the outlook is on a more comprehensive phase two deal – what the language is like, what Trump and the Chinese are saying about it,” said Neil Wilson.
Neil is the chief market analyst at Markets.com.
On Thursday, the Wall Street investors had pushed the S&P 500 to a sixth straight record, its longest such streak since January 2018. All three major U.S. indexes – S&P 500, Nasdaq, and Dow – notched record closing highs.
Still, some data reminded investors of the fragile state of the world economy.
The mood among German consumers deteriorated unexpectedly heading into January, a survey showed, suggesting that household spending in Europe’s largest economy could weaken at the beginning of next year.
Pound endures a tough week
On the currency front, sterling steadied after suffering a sharp reversal that left it facing its worst weekly fall since late 2017 at 2.4%.
The pound was up 0.2% at $1.3025, having slipped overnight to below $1.30, a dramatic drop from a $1.3514 peak when Boris used his sweeping election victory to revive the risk of a hard Brexit.
“We see the biggest risks being to GBP/USD depreciation over the next two weeks as Brexit preparations take place amidst the most sluggish U.K. economy in 10 years,” said Richard Grace,
Richard is the chief currency strategist at CBA.