Markets this week will be dominated by the US-North Korea summit in Hanoi midweek and the looming March 1 deadline for a deal between the US and China on trade tariffs.
Of the two the summit is marginal so far as markets are concerned. Last Friday we saw another rise in optimism about a settlement of the trade war between President Trump and China.
That saw US and Europe shares rise on the day and for the week – Eurozone shares rose 0.2% on Friday and the US S&P 500 gained 0.6%.
Over the week US shares rose 0.6%, Eurozone shares added 0.8%, Japanese shares rose 2.5% and Chinese shares rose 5.4%.
Bond yields were flat to down a little bit. Oil, gold and metal prices rose but iron ore prices fell back a bit but remain very high.
The $A fell slightly despite a lower $US as talk about China blocking some coal imports from Australia faded.
In finishing higher on Friday, the Dow notched up its longest weekly winning streak since 1995 — helped by how the Fed won’t be shrinking its huge balance sheet back to pre 2008 levels (a move that would be highly contractionary) and on the growing optimism from a US-China trade deal.
The S&P 500 rose 0,6% on Friday and for the week – it’s fourth straight weekly gain.
The Dow jumped 0.7% on Friday to be up 0.6% for the week – it was the index’s 9th straight weekly gain.
Nasdaq also rose 0.7% on Friday which took its weekly advance to 0.9%.
Nearly all S&P 500 sectors finished higher on Friday, with tech and telecommunications up more than 1 per cent. Financials and consumer staples — the latter being led lower by a record one-day drop for Kraft Heinz — were the only two segments in the red.
US government bonds rallied on Friday, pushing yields lower, buoyed by remarks in the Fed’s semi-annual report to Congress that it did not expect to reduce its balance sheet to pre-GFC levels.
The yield on the benchmark 10-year US Treasury was down 3.4 basis points (bps) at 2.6536%, while that on the more policy-sensitive was 3.2 bps lower at 2.4974%. The US dollar was slightly weaker.
Commodities like gold, oil, and copper gained on Friday and last week (See separate stories).
