* MSCI ACWI, S&P500 at record highs after Phase 1 deal
signed
* Focus shifts to Phase 2 hurdles
* European shares higher
* Signals from ECB, BoE awaited
* Turkey expected to cut rates again
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Jan 16 (Reuters) - World stocks held near record
highs on Thursday as some encouraging U.S. data ensured there
was no post U.S.-China trade deal hangover for global markets.
After the previous day's excitement the moves among the
asset classes were mostly incremental, but there was still some
energy left.
Reassuring U.S. retail sales data and Morgan Stanley MS.N
wrapping up earnings from Wall Street lenders with a
better-than-expected quarterly profit meant New York looked set
for another record open. .N
MSCI's broadest index of world stocks .MIWD00000PUS was a
touch higher, although Europe was struggling and Asia had seen
China's biggest stocks take a slight dip overnight. .SS
U.S. President Donald Trump and Chinese Vice Premier Liu He
signed a deal that will roll back only some of tariffs that the
two sides have been ratcheting up on each other, with the rest
kept in place for what looks set to be another tricky phase of
talks. "We believe the agreement underpins a positive outlook for
risk assets, especially emerging market stocks," said Mark
Haefele, Chief Investment Officer, UBS Global Wealth Management.
"But it is also important for investors to understand the
limitations of the deal. So we see the deal as representing a
partial calming rather than an end to trade tensions."
The deal wasn't the only focus of the day.
Investors had seen some of the big emerging market central
bank policy meetings in Turkey and South Africa both cut their
interest rates again.
Fourth-quarter corporate earnings updates were streaming in.
The European Central Bank published a largely upbeat set of
meeting minutes ahead of a speech from its chief, Christine
Lagarde. Andy Haldane, one of the Bank of England's last holdouts
against a rate cut, was also due to speak later. Weak UK
inflation data had proved treacherous for the pound on Wednesday
and sterling was still licking its wounds at $1.3050 and 85.4
pence to the euro. /FRX
DONE DEAL, GET REAL
In Asia and beyond, it had pretty much all been a reaction
to the trade deal.
Japan's Nikkei .N225 ended just 0.07% higher, China's
Shanghai composite index lost 0.5% in a third day of falls
.SSEC , whereas Hong Kong, Australia and India and Vietnam all
enjoyed solid gains.
Wall Street's reaction had been record highs all round too
and the Dow Jones Industrial had also closed above the 29,000
point mark for the first time which cheered New York's cap
makers. .N
"While the trade deal has provided a relief, there wasn't
any positive surprises for markets. For shares to rise further,
we need more evidences of improvement in the real economy and
earnings," said Hirokazu Kabeya, chief global strategist at
Daiwa Securities.
U.S. shares are now trading above 18 times expected
earnings, near their post-2008 financial crisis peak marked at
the start of 2018.
DISINFLATION EVERYWHERE
Bond yields idled as a boost from the trade deal failed to
offset pressure from low U.S. producer price inflation data,
which highlighted persistently low inflationary pressure.
The price index rose less than expected in December to cap
2019 with rise of 1.3%, lowest since 2015. The 10-year U.S. Treasuries yield clawed away from one-week
low to 1.80% US10YT=RR . This time last week it was 1.90%.
Most European bond yields in the euro area were standing
still, with German Bund yields just below two-week highs and the
UK's 10-year gilts yield near a 2 1/2-month low at 0.65% on the
growing talk of rate cuts. GB10YT=RR . The Swiss franc held firm, having rising to its strongest
against the dollar in over a year and its highest against the
euro in almost three years after the United States added
Switzerland to its watchlist of currency manipulators.
Washington's decision led traders to think it will become
difficult for the Swiss National Bank to intervene to weaken the
franc in the future.
The Swiss currency last stood at 0.9626 franc per dollar
CHF= , near Wednesday's high of 0.9631.
In the same vein, the Chinese yuan hovered just below its
5-1/2-month high touched earlier this week after Washington
dropped its currency manipulator label on China.
Among the main commodities meanwhile, oil prices clawed
upwards after touching a six-week trough the previous day on
data showing big increases in U.S. refined products and hopes
for more Chinese purchases of U.S. oil and gas.
Brent crude LCOc1 futures rose 0.7% to $64.45 a barrel
while U.S. West Texas Intermediate (WTI) crude CLc1 gained
0.73% to $58.23 per barrel. Gold was little moved at $1,555 an
ounce.
Inflation Image https://tmsnrt.rs/2QTjpV5
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