Global markets were mostly higher on Friday as investors cheered the Federal Reserve’s more restrained stance and opt to view this week’s U.S.-China trade talks in a positive light.
KEEPING SCORE: In Europe, Germany‘s DAX added 0.1 percent to 10,934.19 and the CAC 40 in France edged 0.2 percent higher 4,812.98. Britain’s FTSE 100 rose 0.6 percent to 6,982.74. Wall Street was positioned for a flat opening. Futures for the S&P 500 index rose less than 0.1 percent to 2,595.80 and those for the Dow were flat at 23,962.00.
ASIA’S DAY: Japan’s Nikkei 225 index advanced 1 percent to 20,359.70 and South Korea’s Kospi was 0.6 percent higher at 2,075.57. Hong Kong’s Hang Seng rose 0.6 percent to 26,667.27. The Shanghai Composite surged 0.7 percent to 2,553.83, but Australia’s S&P ASX 200 lost 0.4 percent to 5,774.60. Shares rose Taiwan, Singapore and Malaysia but fell in the Philippines.
POWELL SPEECH: Federal Reserve Chairman Jerome Powell said Thursday that the U.S. central bank has the “ability to be patient” with its plans to gradually raise interest rates. He echoed the tone of other Fed officials who were present at a meeting last month. Minutes of the meeting, which were released a day earlier, showed the officials believed that the central bank could afford to take their time with rate hikes, given recent volatility in financial markets, trade tensions and shaky global growth. A market-sensitive Fed is reassuring to investors who fear its tightening policies would send the U.S. economy into recession.
US-CHINA TALKS: Talks between American and Chinese negotiators may have ended without significant breakthroughs, but traders are choosing to focus on the positives. The fact that talks lasted a day longer than planned, conciliatory statements from both sides and the possibility of higher-level talks in the near future are fueling gains in Europe and Asia. In December, U.S. President Donald Trump and Chinese leader Xi Jinping agreed to a 90-day tariffs ceasefire, for negotiators to soothe tensions that have unsettled trade.
ANALYST’S TAKE: “The sentiment pendulum has swung from U.S. recession fears to optimism for a dovish Fed and positive US-China trade talks. The return of risk appetite, in turn, has pressured the U.S. dollar lower,” DBS Group Research strategists Philip Wee and Eugene Leow said in a commentary.
CHINESE ECONOMY: On Thursday, China released consumer and producer inflation figures that missed the mark. It said consumer prices rose by 1.9 percent in December from a year earlier, down from 2.2 percent in November. This was the slowest pace of growth in six months. Producer prices inched up 0.9 percent from a year ago, far from November’s 2.7 percent rise. Slowing inflation raises doubts about the health of the world’s second largest economy. A Reuters report on Friday, which cited anonymous sources, said China plans to lower its targeted growth in 2019 from around 6.5 percent, to a range of 6 to 6.5 percent.
ENERGY: Oil prices reversed early losses and continued to rise after a nine-day rally. Benchmark U.S. crude added 52 cents to $53.11 per barrel in electronic trading on the New York Mercantile Exchange. The contract is has surged by 23.7 percent since Dec. 24. It added 23 cents to $52.59 per barrel on Thursday. Brent crude, used to price international oils, was up 54 cents at $62.22 per barrel. It gained 24 cents to $61.68 per barrel in London.
CURRENCIES: The dollar weakened to 108.26 yen from 108.43 yen late Thursday. The euro rose to $1.1525 from $1.1501.