A gauge of global equity markets climbed on Thursday on optimism for a speedy economic recovery and a massive stimulus plan in Europe helped lift regional stocks and the euro, while gold rebounded on a safety bid on deteriorating U.S.-China relations. MSCI’s gauge of stocks across the globe .MIWD00000PUS rose 0.46% but Wall Street ended lower after a late-session reversal on headlines that President Donald Trump would hold a news conference on Friday about China. Markets are slowly realizing the escalating tensions between the U.S. and China is not going away and represent headwinds for the global economy, said Ed Moya, senior market analyst at OANDA in New York. Oil futures rose, reversing earlier losses, on signs U.S. gasoline demand is increasing despite a big surprise build in crude inventories and worries that China’s new security law for Hong Kong could result in demand-dampening trade sanctions. Gold pared earlier gains of 1% as rising stock markets dulled its safe-haven appeal, but the escalating U.S.-Chinese tensions kept bullion propped up. China’s parliament approved national security legislation for Hong Kong that democracy activists say could erode the territory’s freedoms and jeopardize its role as a global financial hub. The number of Americans seeking jobless benefits fell for an eighth straight week last week, but claims remained astonishingly high.
The dollar was hemmed into a narrow trading range on Friday as traders’ focus shifted to U.S. President Donald Trump’s response to China’s passage of a national security law for Hong Kong. The yuan fell in onshore trade and remained near a record low in offshore trade as markets turned nervous before Trump’s announcement later on Friday of policy moves that could ignite a diplomatic row between Washington and Beijing. The greenback was on course for a weekly loss against major currencies as progress in lifting coronavirus lockdowns and stimulus plans in Europe weakened demand for safe havens, but the mood could quickly worsen if Sino-U.S. tensions increase. The dollar stood at $1.1083 per euro in Asia on Friday, close to its lowest since March 30. The dollar last bought 0.9632 Swiss francs, on course for a 0.8% weekly decline. The greenback was little changed at 107.43 yen. Japan’s currency crept higher against the euro, the Aussie and the kiwi, supported by safe-haven flows in relatively subdued trade. This week the euro led the charge against a weakened dollar after EU policymakers unveiled fiscal stimulus combining grants and loans intended to ease dissent among euro-zone countries. Analysts say the euro may struggle to extend its gains, because fiscally conservative member states may still push to alter the plan.
Indian shares fell on Friday after two days of strong gains as markets awaited the release of March-quarter GDP figures later in the day, while U.S.-China tensions further dampened sentiment. Gross domestic product (GDP) data is expected to show India’s economy grew at its slowest pace in at least two years, as the COVID-19 pandemic hit already declining consumer demand and private investment. The NSE Nifty 50 index was down 0.76% at 9,418.30 by 0350, while the S&P BSE Sensex fell 0.86% to 31,924.13. The Nifty 50 had gained 5.1% over the past sessions led by a rally in beaten-down banking stocks. Shares in Vodafone Idea Ltd jumped 9.5% after a report that Google was eyeing a stake in the telecom firm. IT services firm Wipro Ltd’s shares were up about 1% after it named a new chief executive officer and managing director. The broader Nifty IT index was down 1.3%.
Oil futures rose about 2% on Thursday as a steady improvement in U.S. refining activity offset a surprise build in crude and diesel inventories and on worries that China’s new Hong Kong security law could result in trade sanctions. Brent for July rose 55 cents, or 1.6%, to settle at $35.29 a barrel on its second to last day as the front-month. U.S. West Texas Intermediate crude rose 90 cents, or 2.7%, to settle at $33.71. That move in U.S. crude narrowed Brent’s premium over WTI to its lowest since mid-April. U.S. crude inventories rose 7.9 million barrels last week, exceeding expectations, due to a big increase in imports from Saudi Arabia, the Energy Information Administration said. Oil prices have rebounded in recent weeks on anticipation of improved demand after the coronavirus pandemic sapped worldwide consumption by roughly 30%. Overall investment is dropping and U.S. production cuts are balancing out the supply glut, but demand still has not bounced back entirely. Uncertainty about Russia’s commitment to continuing deep output cuts kept the rally in check. Saudi Arabia and other OPEC producers are considering an extension of record output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources.