World markets have enjoyed a lively end to an otherwise slow week on Friday, with Chinese A-shares leaping after MSCI quadrupled their weight in its global benchmarks and strong US economic data lifting the US dollar and bond yields.China's blue-chip CSI300 index surged 2.2 per cent to land its best week since November 2015 after MSCI's move. It could potentially draw more than $US80 billion of fresh foreign inflows to the world's second-biggest economy.
"We are seeing a fairly decent uptick in European markets," said CMC Markets analyst David Madden, citing the combination of US and China data as well as encouraging comments from the United States on China trade talks.Spain's manufacturing sector contracted for the first time for more than five years in February data from Madrid showed while in eastern Europe Czech manufacturing sentiment fell at its fastest rate in six years.
"Just two months ago China was facing one of the worst years it's ever had in terms of equity market performance. So I think investors are taking very seriously the fact that the rebalancing of MSCI is happening," said Jim McCafferty, head of equity research, Asia ex-Japan at Nomura. Mixed messages on trade combined with the collapse of the summit between Trump and North Korean leader Kim Jong-un on denuclearisation, and data from China showing slowing factory activity to pressure US stocks.Gross domestic product rose 2.9 per cent for the year, just shy of the 3 per cent goal set by the Trump administration.
The US dollar also rose on the US data, adding 0.4 per cent against the yen to 111.80, having earlier touched a new high for the year at 111.82..
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