By Naomi Rovnick, Rae Wee
LONDON/SINGAPORE (Reuters) -Global stocks looked set for their weakest weekly performance since September 2024, while gold hit a record high, as angst over U.S. tariffs, inflation and a trade row hitting industries from metals to malt whisky weighed on risk appetite.
While relief that a U.S. government shutdown would likely be averted helped steady sentiment on Friday morning, lifting U.S. equity futures, MSCI’s all country world stock index was down 3.4% for the week.
“For today, at least, this news from Congress is positive for market sentiment at this point,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
Spot gold was down 0.1% at $2,984.71 an ounce in early London trading but clocked a weekly gain of about 2.5%, having also touched an all-time high of $2,993.80 earlier on Friday.
The cautious mood had weighed all week, with investors growing more nervous that trade tensions between the U.S. and Europe would escalate after the European Union retaliated against blanket U.S. tariffs on steel and aluminium.
In response, U.S. President Donald Trump threatened to impose a 200% tariff on European wine and spirit imports.
“I think Trump 2.0 is nothing like Trump 1.0,” Michael Strobaek, global chief investment officer at Lombard Odier, said. “This time, the president seems prepared to let U.S. markets and the economy suffer while he implements his ‘America first’ goals.”
The developments sparked Thursday’s steep selloff on Wall Street, and confirmed that the S&P 500 was in a correction, just a week after similar observations for the Nasdaq index.
Friday’s mood was brighter, with Nasdaq futures up more than 1% at one point and S&P 500 futures advancing 0.5%.
Europe’s Stoxx 600 share index was steady in early trading, but still down 2.4% for the week marking a pause in this year’s blistering rally supercharged by investors betting on a big defence spending boost.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.85% higher, although it was on track to lose 1.5% for the week, as simmering trade disputes battered global stocks.
Japan’s Nikkei rose 0.8%.
A surge in consumer shares pushed Chinese stocks higher on Friday, as investors awaited a press conference next week by officials from Beijing’s top planning agency for news on additional measures to boost domestic consumption.
Hong Kong’s Hang Seng Index jumped 2.4%, while China’s CSI300 blue-chip index advanced 2.3%. The Shanghai Composite Index rose 1.7%.
DOLLAR TROUBLE
The dollar regained some ground on Friday due to safe haven flows but stuck close to recent lows.
It was last up 0.68% against the yen at 148.79 while the index measuring the U.S currency against a basket of peers inched 0.1% higher to 103.96, down sharply from about 113 in the month before Trump’s re-election.
Benchmark Treasury yields were up 2 basis points to 4.30%, but remain far below January’s 4.8% level.
Germany’s equivalent Bund yield remained at 2.874% after a rapid climb last week in response to a fiscal reset plan to revive growth and ramp up military spending. The lower house of parliament will vote on the measures on March 18.
The euro last traded flat at $1.0846, while sterling fell 0.13% to $1.29475 after data showed the UK economy contracted unexpectedly by 0.1% in January.
Oil prices, pinned lower this month by recession fears, rebounded on Friday to reflect diminishing prospects of a Ukraine ceasefire, with Brent crude futures adding 0.9% to $70.35 a barrel.
(Reporting by Naomi Rovnick in London and Rae Wee in Singapore; Editing by Kate Mayberry and Rachna Uppal)
