The Friday Market Minute

  • Global stocks extend gains following last night's record-setting session on Wall Street as a weaker U.S. dollar and a U.S.-China trade war lull drives 'risk on' sentiment.
  • China stocks surge into the close as investors snap-up cheap shares following summer rout, lifting Shanghai Composite 2.5% and driving solid Asia-region gains.
  • Global crude prices remain firm despite President Trump's OPEC Tweet as ministers prepare for key meeting Sunday in Algeria.
  • U.S. futures indicate more records on Wall Street Friday, with the Dow poised for a 70-point advance on last night's 26,656.98 point close.

Market Snapshot

Global stocks extended gains again Friday, following on from last night's record-setting session on Wall Street, as investors took advantage of a weaker dollar and a lull in the U.S.-China trade war to return to riskier markets ahead of next week's Federal Reserve meeting and the final trading days of the third quarter.

Fresh all-time highs for the Dow Jones Industrial Average and the S&P 500 Thursday, with the former notching its 100th record since President Donald Trump's election in November 2016, set the tone for a solid Asia session, with a surge in China stocks helping the MSCI ex-Japan index rise 1.4% heading into the final hours of trading, taking its week-to-date advance to 2% and driving the benchmark nearly 5% higher than the 14-month trough in hit on September 12.

In Japan, a weaker yen, which slipped to 112.74 against the greenback in the risk-on regional trading, allowed the Nikkei 225 to rise for the fifth session in six trading day, boosting the benchmark by 0.82% to close at 23,869.93 points.

Stocks in China were the region's outperformer, with the Shanghai Composite rising 2.5% into the close of the session and the CSI gaining 3% to end the week at 3,410.49 points amid the relief of smaller-than-expected tariffs from the United States and a similar response from Beijing earlier this week.

Chinese stocks are surging.
Shanghai Composite bounced 2.1% led by big-cap blue chips.
CSI 300 and SSE 50 up 2.8% and 3%. pic.twitter.com/ya9cCI8ZKi

— YUAN TALKS (@YuanTalks) September 21, 2018

U.S. equity futures suggest Wall Street is primed for another day of all-time highs, with contracts tied to the Dow indicating an 70-point opening bell gain from last night's 26,656.98 point close while those linked to the S&P 500 suggest a 5 point advance from Thursday's all-time high of 2,930.75 points. Nasdaq Composite futures indicate a 20 point gain for the tech-heavy benchmark.

In Europe, the Stoxx 600 index was marked 0.44% higher at 384.30 points by mid-day in Frankfurt as benchmarks around the region posted similar percentage gains as investors shrugged off the stronger euro, which traded at 1.1777 against the dollar, and focused on the improved global risk sentiment, particularly in trade-focused sectors such as autos and basic resources.

Britain's FTSE 100 was marked 0.96% higher in the opening 90 minutes of trading in London as the pound slipped to 1.3185 against the dollar despite a week in which U.K. inflation accelerated to 2.7% and August retail sales rose by a faster-than-expected 2.9%, with both figures adding to the suggesting that the Bank of England may need to quicken the pace of its "gradual" rate increase signalling.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, fell to 93.81, the lowest level since July 9 in overnight trading, before paring the decline to around 93.99 as the Asia session wore on. Still, the index has slipped around 1.1% so far this week, adding an attractive dimension to U.S. exports and easing pressure on emerging market economies who must both fund their dollar-denominated debt payments and purchase crude oil that's priced in greenbacks.

Emerging market stocks, as well as most major currency pairs, have shown a notable ease in volatility this week, supported by both the weakening U.S. dollar and reports that Argentina is close to agreeing terms on a $50 billion support program from the International Monetary Fund that would help protect the plunging peso.

Global oil prices, however, remain elevated despite President Donald Trump's attempt to apply pressure on OPEC ministers ahead of their meeting in Algeria on Sunday, during which they are expected to discuss tweaking output quotas in order to offset the impact of U.S. sanctions on the sale of Iranian crude, which come into effect on November 4.

Trump Tweeted yesterday that OPEC needed to "get prices down now!", arguing that "We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!"

The Tweet had only a short-term impact, however, and both Brent and WTI crude prices trader higher in the overnight session, with Brent contracts for November delivery rising 74 cents per barrel to $79.44 and WTI futures for the same month gaining 50 cents to trade at $70.82 per barrel.