International stock markets have reached a six-month high point this week. Fresh data put the MSCI All-Country World Index up by 1.1% to 514 points - its best position since last October.
Positive talks and progress between the US and China over trade triggered stock market gains last week and saw a return of optimism to trading, with gains made on the FTSE, Dow Jones, Nikkei and Shanghai exchanges.
Today was the official six-month high for many European markets, with Germany’s DAX 30 up 1.37%, Italy’s FTSE MIB up 1.08%, and Spain’s IBEX 35 at 1.03%. Earlier today the Asian markets all reported similar gains of 1% - 1.5% and Wall Street is expected to keep up last night’s gains on all three major indexes – the Dow, Nasdaq, and the S&P500 – at similar levels.
The fear of economic cooling has seen central banks offer more relaxed monetary policies for additional time, to counteract the decisions not to raise interest rates in 2019 by the European Central Bank and the US Federal Reserve. The downturn is from a combination of the trade war and Brexit, as well as a natural economic slowdown as part of the boom and bust cycle, but the policies could offset any serious slump.
There was positive financial news out of the Eurozone this morning, in keeping with the improved market sentiment, with reports of a services PMI upswing in major European countries in line with the return of investor confidence. Only the UK defies the improvement trend, with Brexit uncertainty still weighing on the economy and reducing the UK services PMI to 48.9 points.
Good news for Eurozone business morale.— BP PRIME UK (@bpprimeuk) April 3, 2019
Services PMIs rebound in March: Spain 56.8 (prev 54.5, exp 55.0); Italy 53.1 (prev 50.4, exp 50.9); Germany 55.4 (prev 54.9, exp 54.9); France 49.1 (prev 48.7, exp 48.7); Eurozone 53.3 (prev 52.7, exp 52.7) @graemewearden
There is reason to be optimistic though. The Financial Times reports that the US/China trade deal is 90% complete, while today the UK Prime Minister will meet with the Leader of the Opposition to make what is believed to be serious concessions on Brexit in order to pass the Withdrawal Agreement before the deadline of April 12th.
China’s economy has already responded to the progress being made, with company growth at its best level in nine months, a service sector 14-month high, and a seven-month high for business confidence. The knock-on effect of political resolutions could see a resurgence for both the United States and Europe as investors finally feel assured enough to commit to new or long-term projects.