November 2, 2018 / 9:58 AM / 10 months ago

GLOBAL MARKETS-Shares roar higher on US-China trade deal hopes

* US - China trade deal hopes triggers strong risk rally

* Emerging market shares head for best day since early 2016

* Europe opens higher with Germany’s DAX leading the charge

* Hong Kong, Korean markets have best day in seven years

* U.S. jobs data next key test for rising bond yields

* Dollar dips, Sterling builds on strongest day of the year

* Metals rally on better China sentiment

* Graphic: World FX rates in 2018

By Marc Jones

LONDON, Nov 2 (Reuters) - World share markets roared higher on Friday as hopes built that the United States and China were starting to repair their badly damaged trade relations.

The signals triggered a global surge in risk appetite that lifted metals and swathes of trade-sensitive currencies and bond markets, but it was equities that saw the most explosive action.

A jubilant Asian session, that included 2.5-4 percent leaps for most of region’s big bourses, put the world’s main emerging market index up three percent and on course for its best day and week since early 2016.

Europe was overjoyed too. Germany’s export-heavy DAX jumped 1.5 percent in its best start since July, while Wall Street futures were also up almost one percent ahead of the monthly installment of non-farm payrolls jobs data.

“When Trump wants to bump the market ahead of the mid-terms the market likes it,” Saxo Bank’s head of FX strategy John Hardy referring to next week’s mid-term U.S. elections.

Hardy said while it might just be “political theatre” from Trump for now, the real test would come when he and China’s President Xi Jinping meet at a summit of world leaders later this month in Argentina.

The other key focus meanwhile is if U.S. earnings numbers are strong later and whether that then sends 10 and 30-year U.S. bond yields punching up towards 3.5 percent.

Europe’s bond yields rose were already on the rise and a Reuters poll shows economists expect a 190,000 rise in U.S. jobs and see hourly earnings increasing 0.2 percent having climbed 0.3 percent in September.

Those numbers will follow data this week that has revealed slowing factory growth around the world, but for the day at least those worries were being soothed by the brighter U.S.-China mood.

In currency markets, the hopes saw the dollar dip to a week-low though it held its ground against the safe-haven yen at 113.00 yen.

China’s yuan strengthened to a high of 6.9092 per dollar in onshore markets and also firmed in offshore trade , pulling away from the sensitive seven level.

The euro also edged up 0.15 percent to $1.1426 while the Australian dollar gained 0.5 percent to $0.7240 and sterling made ground again to $1.30 on hopes London is closing in on transitional deal for when it leaves the EU next year.

If it doesn’t slip it will be the second best week of the year for the pound. Thursday was its best day of the year.

“Were it not for Brexit uncertainty, the Bank of England would probably have laid the groundwork (at its meeting on Thursday) for its next rate hike,” BNP Paribas analysts said in a note.


Metals led the charge in the commodity markets on the hopes a trade deal will prevent China’s resource-hungry economy faltering.

Three-month copper on the London Metal Exchange climbed as much as 2.5 percent to $6,240.50 a tonne, its highest in a week.

Other base metals were up across the board too, with zinc rising 1.8 percent, nickel climbing 1.7 percent, lead up 1.3 percent and aluminum gaining 0.9 percent.

Oil prices were less energetic but had managed to reverse early Asian losses, with U.S. crude last at $63.63 a barrel and Brent crude a touch higher at $72.99. (Additional Reporting by Tommy Wilkes in London and Andrew Galbraith in Shanghai and Hideyuki Sano in Tokyo, Editing by William Maclean)

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