Global Stock Markets Hit Record Highs Amid Bout Of Holiday Cheer

LONDON, Dec 27 (Reuters) ― World stocks scaled record highs on Friday and oil prices stayed buoyant in a holiday-shortened week, as optimism grew that a U.S.-China trade deal would soon be signed.

Traders returned from their Christmas and Boxing Day break to digest comments from Beijing that it was in close contact with Washington about an initial trade agreement. Earlier, U.S. President Donald Trump had talked up a signing ceremony for the recently struck phase-one trade deal.

U.S. stock indexes were set to open at fresh record highs on Friday as optimism over U.S.-China trade relations and an improving global economy brightened investor sentiment going into the new year.

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Futures for Canada’s main stock index rose on Friday, supported by higher oil prices. March futures on the S&P/TSX index were up 0.42 per cent at 7:00 a.m. ET.

The Toronto Stock Exchange’s TSX index ended 0.30 per cent higher at its previous, rising to 17,180.15 on Tuesday.

Rising to another record high, European shares were on course for their best year since the financial crisis. The pan-European STOXX 600 index was up 0.2 per cent, helped by gains in export-heavy German shares. The benchmark index has reached record highs for three sessions in a row.

Britain’s FTSE 100, set for its best run in three years, added 0.4 per cent. Mining companies provided the biggest boost, with Glencore Plc and BHP Group Plc climbing about 2 per cent each.

The positive tone was set in Asia. MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 0.8 per cent to 555.39, a level not seen since mid-2018. It is up 15.5 per cent so far this year.

China’s blue-chip CSI300 was down 0.1 per cent, although for the week the index was up 0.1 per cent.

Profits at industrial companies in China in November grew at the fastest pace in eight months, breaking a three-month declining streak, as production and sales quickened. But broad weakness in domestic demand remains a risk for earnings next year, say analysts.

Not at all like last year

The rally in global shares contrasts with a plunge late last year, when the Sino-U.S. trade war had sapped investor confidence. The worries scuttled capital expenditure plans over much of 2019, but strong employment and signs of an improving global economy suggest that will change next year.

The U.S. Federal Reserve’s policy easing, economic data that have come in above expectations, and corporate profits have helped lift stocks this year, along with trade-related optimism. Markets are now waiting for January’s fourth-quarter financial results to see whether sentiment among companies has improved.

But some analysts are wary about risks ahead in 2020.

“The trade war … is far from over,” Piotr Matys, FX strategist at Rabobank, wrote in a research note. “In our view, this is just a temporary truce. Another unsolved major issue is Brexit. Geopolitical risk can suddenly resurface.”

― Additional reporting by Swati Pandey in Sydney; editing by Larry King; with files from Manas Mishra and Nidhi C Sai.