Stock markets rise as a turbulent trading week comes to an end

Global stock markets rose on Friday as investors put economic growth fears and trade jitters to one side, deciding that they had had enough drama and losses for one week.

«We›re ending a turbulent week on a more positive note as exhausted traders the world over head into the weekend in a more buoyant mood,» said Craig Erlam, senior market analyst at the Oanda trading group.

Equities have had a volatile five days, during which US-China trade talk hopes came and went and economic data pointed to a possible worldwide downturn.

The Dow on Wednesday suffered its worst one-day fall of the year, before recovering slightly on Thursday, reassured by strong US retail sales and Walmart earnings.

On Friday, it continued its modest recovery at the opening bell.

The week›s most nerve-wracking event was a so-called inversion of the yield curve in the US debt market that Erlam said «has spooked a lot of people this week».

The yield on the 10-year US Treasury bond slid on Wednesday below the yield on the two-year note, meaning the short-term interest rates were higher than longer-term ones.

The so-called «inversion» phenomenon is viewed by markets as a reliable harbinger of recession.

Economists have warned for months that trade tensions would drag down sentiment, which was already suffering owing to China›s economic slowdown and fears of Brexit›s impact on Britain and Europe.

The tensions have hit global demand, with data this week showing China›s industrial output had plummeted to a 17-year low. Pro-democracy protests in Hong Kong were adding to the negative sentiment.

Cathay Pacific on Friday announced the shock resignation of its chief executive Rupert Hogg, days after the Hong Kong carrier was censured by Beijing because some staff had supported pro-democracy protests in the city.

Paul Loo, Cathay›s chief customer and commercial officer, also resigned.

Until recently Cathay had been celebrating a turnaround in fortunes after Hogg initiated a three-year cost cutting programme.

Elsewhere Friday, the opening of London›s benchmark FTSE 100 shares was delayed nearly two hours by a software problem, the London Stock Exchange said.

«London Stock Exchange experienced a technical software issue this morning that affected trading in certain securities, including FTSE 100 and (second-tier) FTSE 250 stocks,» said a statement.

The pound meanwhile continued its recovery, «aided by a series of better-than-expected (UK) economic releases in recent days», helping to offset Brexit uncertainty, according to David Cheetham, chief market analyst at XTB trading group.

The euro faltered on expectations that an ECB stimulus programme to be announced next month could be larger than expected.

Meanwhile, long-dated British government bond yields bounced off record lows and short-dated yields jumped to a four-week high on Friday, as investors paused for breath after ditching stocks in favour of bonds earlier this week.

Share prices rose globally as expectations grew of further stimulus by the Federal Reserve and European Central Bank, offsetting worries about slowing economic growth, which intensified this week as the US yield curve inverted for the first time since 2007.

Thirty-year gilt yields hit a fresh record low of 0.904% early on Friday but lifted above Thursday›s close later in the day and stood more than five basis points up on the day at 1.01% at 1442 GMT. Lower bond yields reduce the cost of new government borrowing, but also act as a signal that financial markets expect slower growth and cuts in Bank of England interest rates.  Two-year yields rose 10 basis points on the day - on course for their biggest increase since September 2017 - to hit their highest level since July 18 at 0.544%, while 10-year yields rose 8 basis points to 0.49%, off a record low of 0.407% struck on Thursday.

As a result, Britain›s two-year/10-year yield curve became further inverted to minus six basis points - though economists cautioned against reading this as a clear signal of an upcoming recession. «Whereas an inverted yield curve has been a good indicator of US recessions, the UK yield curve is less reliable,» Capital Economics economist Andrew Wishart said. Britain›s economic outlook remained heavily determined by Brexit, and whether Prime Minister Boris Johnson takes Britain out of the bloc on Oct. 31 without a deal.

Agencies