Morning Bid: Markets come up for air but tariff threats lurk

A look at the day ahead in European and global markets from Rae Wee.

Global stocks caught some much-needed relief on Friday after a week of heavy battering, momentarily putting aside worries over trade wars when top U.S. Senate Democrat Chuck Schumer signalled his party would provide the votes to avert a government shutdown.

Traders reacted quickly to send stock futures higher: Nasdaq futures jumped more than 1% while S&P 500 futures climbed 0.8%, relatively big moves for Asian hours.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1%.

Europe similarly looked set for a strong opening, with EUROSTOXX 50 futures gaining 0.3% and DAX futures tacking on 0.5%.

The market's touchiness towards news that had rarely stirred much reaction in the past suggested just how jittery investors had become.

"If you're already in a haunted house and you're already rattled, then every little mouse will scare you," said Vishnu Varathan, Mizuho's head of macro research for Asia ex-Japan.

In recent years markets have been largely unfazed by headlines surrounding U.S. government shutdowns, given that lawmakers routinely pass temporary spending bills to keep the government operating while they finish their work.

But going into the week's end, global markets were reeling over fears of an impending U.S. recession and an escalating global trade war.

Traders in London will wake up to the release of UK growth estimates for January due early in Europe's day. Expectations are for the economy to have grown 0.1% on a monthly basis, a slight slowdown from December's 0.4%.

It's worth noting that Britain's relatively measured approach to U.S. trade ructions and the largely balanced trade position between the two have benefited the pound, which was on track for a second straight weekly gain.

Over in the U.S., the University of Michigan Surveys of Consumers will be the key item to watch on Friday, given how U.S. President Donald Trump's tariff salvos are rattling businesses and consumers alike.

Meanwhile, Chinese equities have emerged as an unlikely sanctuary for global investors seeking shelter from all the uncertainty in the United States.

Hong Kong's Hang Seng Index is up 17% since Trump returned to the White House in January, compared with a drop of about 9% in the S&P 500.

Stocks in mainland China and Hong Kong surged again on Friday, led by consumer shares, after a northern Chinese city announced plans to boost birth rates. Investors are also awaiting a press conference next Monday by Chinese officials from the top planning agency and elsewhere for additional measures to enhance domestic consumption.

Key developments that could influence markets on Friday:

- UK GDP estimate (January)

- UK industrial output (January)

- U.S. University of Michigan Surveys of Consumers (March)

(By Rae Wee; Editing by Edmund Klamann)