Stock markets climb on trade talks optimism

London: Stock markets rose on Friday after US President Donald Trump struck an upbeat note on trade talks with China, while the pound ended a volatile Brexit-fuelled week by rising against the dollar.

The main European markets all moved higher in afternoon trading, and US stocks rose at the opening bell with «reports of progress on the US-China trade front seeming to buoy sentiment», said analysts at Charles Schwab brokerage.

Tokyo›s main stocks index closed higher despite the Bank of Japan issuing a more downbeat assessment of the world›s third biggest economy, as a broader global slowdown impacts exports and production.

 While concerns about the global growth outlook remain, investor confidence has been supported by ongoing optimism that the United States and China will eventually hammer out a deal to end their long-running trade row.

Trump on Thursday provided fresh cheer by telling reporters «we are doing very well with China talks», adding that «we are getting what we have to get».

He also said «one way or the other, we›re going to know over the next three to four weeks».

On Friday, China approved a foreign investment law that will abolish the forced transfer of technology from foreign firms to local joint-venture partners, addressing a key point of anger in the White House.

On currency markets the pound climbed versus the dollar and steadied against the euro after a week that saw wild fluctuations for the UK unit triggered by Brexit twists and turns.

British Prime Minister Theresa May›s EU withdrawal agreement was this week rejected by parliament for a second time.

But the divorce deal could yet return from the dead should hardcore Brexiteers fear a delay could produce a softer Brexit that what is currently on offer.

«There›s still a significant amount of tail risk in being overly exposed to sterling» because of Brexit uncertainty, said Michael Hewson, chief market analyst at CMC Markets UK.

«Ultimately talk is cheap, and markets require certainty, something that still remains in short supply.»

Wall Street edged slightly higher at the open on Friday, with US stocks poised to post gains for the week as investors were comforted by continued US-China trade negotiations.

The upward momentum came despite plunging economic data for the US manufacturing sector, which economists say is suffering as China›s economy slows.

The New York Federal Reserve Bank›s survey of regional manufacturing activity fell to its lowest level in about two years as orders and shipments dropped.

Meanwhile, the Federal Reserve also reported that nationwide US manufacturing had fallen sharply for the second month in a row -- with across-the-board declines in nearly every category of product.

About 10 minutes into the day›s trading, the benchmark Dow Jones Industrial Average added less than a tenth of a percentage point to 25,721.16.

The broader S&P 500 was up 0.2 percent to 2,813.38 while the tech-heavy Nasdaq posted stronger 0.3 percent gain.

Shares in Boeing were down another 1.2 per cent as the company halted deliveries of its top-selling 737 MAX aircraft following Sunday›s fatal crash in Ethiopia, the second deadly accident in less than five months.

Analyst Patrick O›Hare of Briefing.com said some buying enthusiasm could be due to expiring options.

«Some are ascribing today›s bullish bias to today›s quadruple witching, which involves the quarterly expiration of index futures, index options, stock options, and single-stock futures,» O›Hare wrote.

«It›s an esoteric reason, but one that has had legs all week as a reported market driver.»

Meanwhile, China›s official Xinhua news agency reported «substantial progress» occurred in during a phone call between trade enjoy Liu He and US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin.

Shares in chip makers AMD and Nvidia, which are exposed to the Chinese market, rose 2.3 per cent and 2.9 percent, respectively.

Meanwhile, retail and cloud computing giant Amazon gained 0.9 per cent following the latest analyst upgrade on the company›s stock.

European shares rose on Friday and were set for their best week in a month. The pan-European STOXX 600 was up 0.3 percent at 1020 GMT, piercing the Oct. 5 high set on Thursday, and all the major bourses were in positive territory.

London›s FTSE 100 outperformed, lifted by its heavyweight oil and mining stocks on higher metals and crude prices. Germany›s trade-sensitive DAX was up 0.3 per cent.

Agencies