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Home / Business / Tech profits and Korean vibes boost global equities

Tech profits and Korean vibes boost global equities



LONDON (Reuters) – World equities rose Friday, buoyed by strong gains for technology giants like Amazon and Facebook, and growing hopes for a lasting peace on the Korean peninsula following a groundbreaking meeting with North and South Korea's leaders.

FILE PICTURE – The logo of the web service Amazon is shown on the photo from 8 June 201
7. REUTERS / Carlos Jasso / Illustration / File Photo

The European stock should also end the week with a boost, with a pan-European index contesting its fifth consecutive week of profits outperforming the tech sector.

The recent gains are fueled in part by the projected first quarter earnings from two of the so-called FANG technology stocks – some of the world's largest and most influential companies by market capitalization – which has boosted sentiment in the technology sector worldwide.

Amazon.com Inc shares rose more than 6 percent in aftermarket trading, while Facebook gained 9.1 percent on Thursday, easing worries over the impact of using customer data.

"Macroeconomic data has been weak in some key economies, so it's reassuring that we continue to expect strong earnings from major concerns like Amazon and Facebook in these concerns," said Investec Clarke's Victoria expert.

"This is a good measure of the broad driving force of sentiment, especially as these concerns over demand persist in the face of weak economic data," Clarke added.

European tech stocks rose 0.75 percent to their highest levels in more than five weeks, driven by gains from local IT and chip manufacturers such as Capgemini, ASML and Infineon.

Britain has had bad news about the growth front. The data showed that the economy slowed much faster than expected in the first three months of 2018.

This has narrowed market expectations of a rate hike by the bank next month from England and sterling fell to its lowest level since March 9 against the dollar

The data showed "that the (UK) slowdown is more structural" said Mizuho's head of hedge fund sales, Neil Jones.

South Korean President Moon Jae-in and North Korean leader Kim Jong Un gather in the demilitarized zone between the two Koreas on April 27, 2018, to reach the truce village of Panmunjom. Korea Summit Press Pool / Pool via Reuters

However, the rise in the pound sterling has resulted in UK stocks in the FTSE index rising by almost half a percent, with profits made by multinationals earning a large portion of their revenues overseas , Profits in pounds posted.

Weak data adds to concerns that economic growth in the developed world is waning, especially after the lackluster euro-zone figures start earlier this week, and Friday's data showed that French economic growth slowed more sharply in the first quarter.

"The Eurozone economy does not seem to have the kind of momentum it had in the past year," said Satoshi Okagawa, senior global market analyst for Sumitomo Mitsui Banking Corporation in Singapore.

Previously, Asian markets had enjoyed the glitter of the summit between Kim Jong Un and Kim Jong Un and South Korean President Moon Jae-in. Political leaders and investors hope that this would ease tensions over Pyongyang's nuclear weapons program and pave the way for the north and south to end their decade-long conflict.

This has helped Seoul's equities rise more than 1 percent to a one-month high in the near-term and strengthened earnings. The MSCI Asian equity index outside Japan gained 0.8 percent and the Japanese Nikkei stock index rose 0.7 percent at two-month peaks.

Meanwhile, the dollar has peaked against a basket of currencies since January 12, having recently benefited from US Treasury yields – 10-year yields reached 3 percent for the first time since January 2014, this week.

With a weekly gain of more than 1.5 percent, the greenback is ready for its best weekly performance since the end of November 2016.

"US prices did not matter to the dollar, now they do, and our positioning metrics suggest that there are more opportunities for short dollar positions," said Michael Sneyd, global head of FX strategy at BNP Paribas in London.

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Abhinav Ramnarayan's report, Additional coverage by Saikat Chatterjee and Helen Reid in London and Masayuki Kitano in SINGAPORE; Arrangement by Toby Chopra


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