Stock markets rallied yesterday on easing trade war tensions and as markets looked ahead to key US jobs data.

Awaiting US monthly employment figures, markets reacted to a report that the United States could delay its plan to hit Mexico with tariffs news that also helped lift Wall Street overnight.

Stock markets also continued to win support from prospects of US interest rate cuts and ECB support for the eurozone.

“The monthly United States non-farm payrolls release is always one of the highlights on the economic calendar but... (Friday’s) data will be viewed even more keenly than usual with speculation mounting that the Federal Reserve are set to begin cutting interest rates,” said David Cheetham, chief market analyst at XTB trading group.

US stocks enjoyed a bounce on Thursday after Bloomberg News reported that Washington could push back its plan to impose tariffs on Mexico on June 10 to allow more time for talks on illegal immigration.

Upbeat comments from Mexican Foreign Minister Marcelo Ebrard, who said the talks with United States officials had yielded progress, added to the positive mood.

Export-dependent Mexico has been scrambling to stem the flow of Central American migrants to the United States – deploying troops along its border with Guatemala, blocking a new caravan and freezing the bank accounts of suspected human traffickers – in a bid to appease Washington.

“There is a good chance that the markets are getting ahead of themselves here,” cautioned Jasper Lawler, head of research at London Capital Group.

“History tells us that there have only been a limited number of occasions where (United States President Donald) Trump has not stuck to his word over a trade tariff threat. 

“Mexico is pushing for more time but we are less convinced than the markets that Trump will grant it.”

Amid mounting concern for the health of the global economy notably because of the United States-China trade war, central bankers have taken a dovish stance to head off potential recession.

The European Central Bank on Thursday announced that it would extend its key interest rates for the eurozone – currently at historic lows – for at least the next six months.

The signals from the ECB have brought relief to investors as the eurozone battles rising worries about growth and inflation. (AFP)

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