World equity markets rebounded on Friday from the previous day’s sharp fall, boosted after U.S. President Donald Trump said complaints against China’s Huawei Technologies might be resolved within the framework of a Sino-U.S. trade deal.
Tensions remained high, with China accusing U.S. Secretary of State Mike Pompeo of fabricating rumors after he said Huawei’s chief executive was lying about the telecom network gear maker’s ties to the Chinese government.
On Thursday, Trump said a trade deal could resolve U.S. complaints against Huawei, but also called the company “very dangerous.”
“Today’s action is mostly based on sentiment because the overall market is trading at a full valuation,” Rahul Shah, chief executive of Ideal Asset Management in New York, said of equities.
Investments remain highly susceptible to headline risk, Shah said, though investors took in stride a U.S. Commerce Department report that said new orders for domestic capital goods fell more than expected in April.
The report also showed March orders were not as strong as previously thought, and shipments were weak over the last two months, further evidence that manufacturing and the U.S. economy were slowing.
Canada’s main stock index rose on Friday after two days of sharp declines.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 65.43 points, or 0.4 per cent, at 16,230.04.
Eight of the index’s 11 major sectors gained, led by the financial sector’s 0.8-per-cent rise. Bank of Montreal jumped 1.7 per cent, while Royal Bank of Canada increased 1.2 per cent.
The energy sector reversed early losses to rise 0.4 per cent, while the materials sector, which includes precious and base metals miners and fertilizer companies, added 0.5 per cent.
MSCI’s gauge of stock performance across 47 countries gained 0.47 per cent, while the pan-European STOXX 600 index closed up 0.56 per cent.
Investors appeared unfazed by British Prime Minister Theresa May’s resignation as Conservative party leader after failing in a final attempt to win parliamentary support for her deal to exit the European Union.
On Wall Street, the Dow Jones Industrial Average rose 98.14 points, or 0.39 per cent, to 25,588.61, the S&P 500 gained 4.14 points, or 0.15 per cent, to 2,826.38 and the Nasdaq Composite added 8.73 points, or 0.11 per cent, to 7,637.01.
The U.S. dollar edged off two-year highs set on Thursday, pressured as the weak U.S. manufacturing activity data sparked worries the trade conflict with China may hurt the world’s largest economy.
Against a basket of six major currencies, the dollar was down 0.28 per cent at 97.586, well off the two-year high of 98.371 the previous session.
The euro rose 0.23 per cent to $1.1206 while the Japanese yen strengthened 0.26 per cent versus the greenback at 109.31.
U.S. Treasury yields rose, as Trump’s remarks about Huawei encouraged investors to book profits a day after a surge in government bond prices and ahead of a long U.S. holiday weekend.
Benchmark 10-year U.S. Treasury notes fell 8/32 in price to push yields up to 2.3237 per cent.
U.S. markets will close on Monday for Memorial Day, a federal holiday.
May’s resignation briefly sent sterling fluctuating wildly. It rose nearly half a percent against the dollar after the announcement and traded near those gains at $1.2716. Against the euro, sterling snapped a 14-day losing streak.
Oil prices climbed more than 1 per cent on Friday ahead of long U.S. and UK holiday weekends, but posted the biggest weekly drop of the year, pressured by rising inventories and worries about the global economy.
Brent crude rose 93 cents, or 1.4 per cent, to settle at $68.69 a barrel, but the global benchmark notched a weekly decline of about 4.5 per cent.
U.S. West Texas Intermediate crude rose 72 cents, or 1.2 per cent, to end at $58.63 a barrel. It notched a weekly decline of about 6.4 per cent, its steepest since December.
U.S. crude was pressured by climbing inventories, which are at their highest nationwide since July 2017 and at the highest since December 2017 at the Cushing, Oklahoma, delivery hub for the U.S. benchmark.
Gold steadied, under pressure from the equities rebound but supported by a weaker dollar and growing expectations for a U.S. interest rate.
U.S. gold futures for June settled down 0.1 per cent at $1,283.60 an ounce.