Stocks rally on trade, central bank optimism
Stocks climbed after the Trump administration signalled progress on trade negotiations and speculation grew that major central banks will shore up their economies. The dollar rallied to this year’s high.
The S&P 500 Index rose for a third day, led by chipmakers, as U.S. Commerce Secretary Wilbur Ross said the nation will delay restrictions imposed on some business operations of China’s Huawei Technologies Co. The Treasury market was unfazed by President Donald Trump’s call for the central bank to cut rates by “at least 100 basis points.” Bunds tumbled as Germany was said to be preparing fiscal stimulus measures. Oil climbed as a drone attack in Saudi Arabia highlighted simmering Middle East tension. Gold fell.
The Dow Jones Industrial Average rose 249.78 points, or 0.96 per cent, to 26,135.79, the S&P 500 gained 34.97 points, or 1.21 per cent, to 2,923.65 and the Nasdaq Composite added 106.82 points, or 1.35 per cent, to 8,002.81.
The S&P/TSX composite index was up 154.26 points at 16,304.05.
The October crude contract was up US$1.33 at US$56.14 per barrel and the September natural gas contract was up one cent at US$2.21 per MMBTU. The December gold contract was down US$12 at US$1,511.60 an ounce and the September copper contract was up 0.65 of a cent at US$2.60 a pound.
The week started on a positive note as the news on Huawei was seen as encouraging for the long-awaited trade pact between the world’s two largest economies. Still, the company said the temporary relief doesn’t change the fact that it’s been treated “unjustly.” The announcement of a reprieve followed a tweet from Trump over the weekend indicating the U.S. was “doing very well with China, and talking,” but suggesting he wasn’t ready to sign a deal.
“It’s kind of like a drunken walk,” said Paul Nolte, a money manager at Kingsview Asset Management in Chicago. “There’s no rhyme or reason from day to day as to what’s happening with trade, and trade is really what’s driving the markets. And there’s no way to handicap it. There is no glide path ... It’s a random walk.”