S&P 500 slips, but losses kept in check as Nvidia climbs ahead of results
* MSCI World share index +0.3% in fourth straight week of
gains
China blue-chips +1.6% after Caixin PMI provides positive
surprise
* Chinese officials doubtful on long-term trade deal with US
By Marc Jones
LONDON, Nov 1 (Reuters) - World shares were eyeing two-year
highs and a fourth straight week of gains on Friday as the third
U.S. interest rate cut of the year and a surprise bounce in
Chinese manufacturing activity eclipsed a blizzard of otherwise
sickly global data.
Reports of more U.S.-China trade difficulties, impeachment
strains on Washington, the first day at the ECB without Mario
Draghi and monthly U.S. jobs figures were all in the mix too,
but markets marched on.
Europe's STOXX 600 index .STOXX started 0.3% higher, led
by a 0.4% rise in Germany's China-exposed firms .GDAXI after
the overnight news that China's factory activity expanded at its
fastest pace in more than two years last month.
That had helped Asia too. Chinese blue chips .CSI300
jumped 1.7% in their best day since mid-August, Seoul's Kospi
.KS11 rose 0.77% and Hong Kong's Hang Seng .HSI added 0.65%
despite data confirming protests there had pushed city into its
first recession in a decade. "The (Chinese) numbers are good given it came ahead of
expectations and expansion is always a welcome," said David
Madden, an analyst at CMC markets in London.
There had been a slight wobble in sentiment overnight after
a Bloomberg report citing unnamed Chinese officials airing
doubts over whether a comprehensive long-term trade deal is
possible. Efforts by Washington and Beijing to end their bruising
nearly 16-month trade war had appeared on track on Thursday.
U.S. President Donald Trump said the two sides would soon
announce a new venue for the signing of a "Phase One" trade
deal, after protests in Chile had seen a planned summit there
this month cancelled.
China's doubts were "not entirely unexpected", Greg McKenna,
strategist at McKenna Macro, said in a note to clients, saying
that the falls in equity markets overnight were relatively
small.
"Either way, today's deluge of manufacturing PMI's and then
U.S. non-farm (payrolls) will be an important factor in where
markets head next," he added.
Payrolls figures are always closely scrutinised by traders
as they are seen as an up-to-date gauge of U.S. economic health.
Forecasts this time are for 89,000 new jobs last month which
would be well below September's 136,000 and the recent average.
There also will be the ISM manufacturing PMI reading which
is expected to see a rise to 48.9 from 47.8 in September. A
separate PMI survey from the Chicago Fed USCPMI=ECI on
Thursday showed a sharper contraction in midwestern
manufacturing activity for October.
The expectation of more soft data kept the dollar down
against the yen at 107.97 JPY= and on track for its biggest
weekly loss against the Japanese currency since Oct. 4.
It was also at a 10-day low versus the euro at $1.1165
EUR=EBS , still struggling after the Federal Reserve had cut
U.S. interest rates for a third time this year on Wednesday.
Euro zone government bond yields steadied near two-week lows
meanwhile, on course for their biggest weekly decline in five
weeks as Christine Lagarde officially began her presidency of
the European Central Bank.
Analysts said the resumption of asset purchases by the ECB
this week had also been helping the bond markets, though focus
is already turning to what Lagarde will do during her eight-year
term.
The decision to resume asset purchases has divided the
central bank and fuelled a perception in markets that the bar to
further monetary easing is now high.
Having discounted an ECB depo rate of close to -0.8% just a
couple of months ago, the market no longer expects another cut
of 10 basis points in 2020 ECBWATCH .
"It's pretty clear that Lagarde has an uphill task in trying
to promote unity that leads to a coherent set of policies going
forward," said Philip Shaw, chief economist at Investec. "Her
own views can be characterised as continuity with" former ECB
chief Mario Draghi.
Among the main commodities, oil prices were little changed
on Friday but set for a slide of around 3.5% on the week hurt by
rising global supply and concerns about future demand. O/R
Despite the positive China surprise, Japanese factory
activity sank to more than a three-year low last month data
there had shown. Japan is the world's third largest economy.
U.S. crude inventories USOILC=ECI rose by 5.7 million
barrels in the week to Oct. 25 too, dwarfing analyst
expectations for an increase of just 494,000 barrels.
Brent crude LCOc1 ticked up 27 cents, or 0.4%, at $59.89 a
barrel by 0955 GMT, on course for a drop of about 3.4% for the
week.
West Texas Intermediate crude CLc1 rose 32 cents to $54.50 a
barrel, which would leave it with a weekly loss of more than
3.8%.
China PMIs https://tmsnrt.rs/2N4shoL
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>