Global stocks near record highs on trade hopes, dollar firms up

European shares hit 4-year high, FTSE at 2-month high

NEW YORK, Nov 27, (RTRS): The US dollar rose and a gauge of global equities pushed closer to an all-time high on Wednesday after a batch of US economic data brightened the economic outlook and investors remained bullish on the prospect of a US-China trade accord.

Stocks on Wall Street opened at fresh record highs, the latest surge after the Dow Industrials, S&P 500 and Nasdaq indexes closed at new records in five of the past eight sessions.

MSCI’s gauge of stock markets across the globe gained 0.2% and hovered less than 2 points from an all-time high of 550.63 set in January 2018.

Major pan-European equity indexes traded at highs last seen in 2015 while MSCI’s emerging markets index also gained, also bolstered by hopes that the United States and China were close to signing an initial deal that would end a 16-month trade war.

The pan-European STOXX 600 index rose 0.33% while earlier in Asia Japan’s Nikkei rose 0.28% and most other Asian markets rose on hopes of a trade deal.

Chinese shares fell as weak industrial profit data highlighted growing strains on China’s economy.

The Dow Jones Industrial Average rose 3.53 points, or 0.01%, to 28,125.21. The S&P 500 gained 6.76 points, or 0.22%, to 3,147.28 and the Nasdaq Composite added 37.55 points, or 0.43%, to 8,685.48.

The dollar index rose 0.18%, with the euro down 0.21% to $1.0995. The Japanese yen weakened 0.29% versus the greenback at 109.38 per dollar.

Sterling continued to wobble as preelection opinion polls showed some narrowing of British Prime Minister Boris Johnson’s Conservatives lead over opposition parties, even though he remains favoured to gain an overall majority.

In Europe, core European government debt yields rose slightly, with yields on benchmark German 10-year bonds pushing above one-month lows.

Oil edged lower after a report showing US crude inventories grew unexpectedly last week, but optimism that a US-China trade deal would be reached soon limited losses.

US West Texas Intermediate crude fell 69 cents to 58.72 a barrel. Global benchmark Brent crude lost 43 cents to $64.84 a barrel.

Safe-haven gold changed hands at $1,453.78 an ounce on the spot market, down 0.5% on the day and heading for its worst month in almost three years after a 3.5% drop.

US

Wall Street’s main indexes notched fresh record highs on Wednesday, as latest data pointed to a resilient domestic economy and investors remained optimistic about a resolution to the prolonged US-China trade war.

The three major US stock indexes have hit record highs this month on expectations of a trade truce and fairly solid third-quarter earnings.

At 10:05 am ET, the S&P 500 was up 4.21 points, or 0.13%, at 3,144.73 and the Nasdaq Composite was up 26.91 points, or 0.31%, at 8,674.84. But the Dow Jones Industrial Average was down 21.34 points, or 0.08%, at 28,100.34, weighed down by Boeing Co.

Shares of Boeing dipped 1.3% after the Federal Aviation Administration said it would be the only issuer of airworthiness certificates for all new 737 MAX planes, potentially affecting the planemaker’s timeline of starting deliveries by December. Another report said Boeing 777X’s fuselage split during a September stress test.

Data on Wednesday showed new orders for key US-made capital goods increased by the most in nine months in October.

The Federal Reserve’s three interest rate cuts this year have helped the domestic economy blunt the hit from the trade war.

Under Armour Inc jumped 6.8% as Raymond James upgraded the sportswear maker’s shares to “strong buy” from “outperform”.

Deere & Co dropped 3.2% as the farm equipment maker warned of lower earnings in fiscal year 2020 after reporting a fall in quarterly profit.

Trading volumes are expected to be light ahead of the Thanksgiving Day holiday on Thursday and an early market close on Black Friday.

Advancing issues outnumbered decliners by a 1.65-to-1 ratio on the NYSE and by a 1.94-to-1 ratio on the Nasdaq.

The S&P index recorded 32 new 52week highs and no new low, while the Nasdaq recorded 61 new highs and 14 new lows.

UK

London’s FTSE 100 rose for a fourth straight session and hit a two-month high on Wednesday as recent risk-on sentiment was bolstered after US President Donald Trump said Washington and Beijing were close to a “phase one” trade deal.

The main index added 0.3%, as Asiafocussed HSBC and miners gained on the prospect of an initial US-China trade deal. A softer pound also helped bluechip exporters such as Reckitt rise.

The FTSE 250 edged 0.1% lower, as publisher Future Plc weighed with an 11% slide following a discounted share placement. Its shares were on track for their worst day since mid-June.

The mid-caps, however, still hovered around a near 15-month high scaled earlier this week. The index has climbed 3.5% higher since Oct 29, when parliament approved Prime Minister Boris Johnson’s call for a general election.

News-driven moves were scant, though soft drink company Britvic, which owns the Tango, J2O and Fruit Shoot brands, slipped 3% after its annual profit slumped nearly a third.

Europe

European shares touched a four-year high in early trading on Wednesday, as comments from US President Donald Trump sparked hopes of an imminent resolution to the drawn-out trade war with China.

The pan-European STOXX 600 index was up 0.1%, led by trade-sensitive miners, which gained 0.8%.

Trump said on Tuesday that Washington was in the “final throes” of work on an initial trade agreement, adding to optimism from earlier in the day when Beijing said top negotiators from both countries had reached a consensus on “resolving relevant problems”.

European shares have crawled towards a record high this month on hopes that the world’s top two economies would defuse a trade war that has dulled business sentiment, dented corporate investment and hurt global growth.

But impediments to a truce remain, with a US bill on human rights in Hong Kong being a potential sticking point with China. Reuters also reported last week that the interim deal could slide into 2020, given China’s ask for more extensive tariff rollbacks.

Investors have turned to central banks in major economies for clues on monetary policy to stem the global downturn. The European Central Bank cut interest rates deeper into negative territory in September, while the US Federal Reserve has lowered borrowing costs three times this year.

A Reuters poll on Wednesday showed the benchmark European index is expected to hit a record high by the end of next year, underpinned by loose monetary policy and hopes of an orderly Brexit.

Export-laden Frankfurt shares were trading flat on Wednesday, largely shrugging off data showing profits at China’s industrial firms shrinking at their fastest pace in eight months in October.

German real estate firm Aroundtown jumped 4% to a record high after posting better-than-expected third quarter results and raising its full-year forecast.

Finnish ship technology and powerplant maker Wartsila rose 3% as one brokerage raised its rating on the stock and two research firms boosted their price targets.

Asia

Shares were mostly higher in Asia on Wednesday after a fresh set of record highs on Wall Street, spurred by encouraging signs on trade talks between the US and China.

Japan’s Nikkei 225 advanced 0.3% to 23,437.77 while the S&P ASX 200 in Australia climbed 0.9% to 6,850.60. South Korea’s Kospi gained 0.3% to 2,127.85. The Hang Seng in Hong Kong was almost unchanged at 26,916.84.

The Shanghai Composite index lost 0.2% to 2,900.47. Shares fell in Malaysia but rose in Taiwan and elsewhere in Southeast Asia.

Investors have grown more hopeful over trade negotiations as the world’s two largest economies continue to keep their rhetoric in check. That’s a clear difference from earlier this year, when a sharp comment from either side would seemingly silence any ongoing talks and worsen relations.

The latest signals indicating that China and the US are making progress toward a deal on trade have been particularly encouraging, as new US tariffs are set to hit Dec 15 on many Chinese-made items on holiday shopping checklists, such as smartphones and laptops.

Oil

Oil steadied above $64 a barrel on Wednesday as concerns about a report showing a surprise boost in US crude inventories were offset by optimism that a US-China trade deal would be agreed soon.

Oil industry group the American Petroleum Institute on Tuesday said US crude inventories rose by 3.6 million barrels, compared with analysts’ expectations for a decrease. The US government’s supply report is due later on Wednesday.

Benchmark Brent crude was up 7 cents at $64.34 a barrel by 1440 GMT. US West Texas Intermediate crude fell 18 cents to $58.23.

Oil has risen for the last two days on expectations that China and the United States, the world’s two biggest crude users, would soon sign a preliminary agreement, signalling an end to their 16-month trade dispute.

That was fuelled by comments from President Donald Trump, who said on Tuesday the United States and China were close to agreement after top negotiators spoke by telephone and agreed to keep working on remaining issues.

Attention will focus later on Wednesday on the weekly oil supply report from the US Energy Information Administration, which is due at 1530 GMT.

Currencies

The dollar rose on Wednesday helped by upbeat US data even as continued uncertainty about the outlook for a preliminary US-China trade agreement and a shortened holiday week in the United States kept currency moves muted.

The US Federal Reserve has cut rates three times this year and signaled its rate-cut cycle might be at a pause. A show of strength in US economy is giving traders confidence the central bank will keep borrowing costs where they are for now.

“The other thing is that this is basically the end of the week for US markets and no one wants short dollar exposure going into the Thanksgiving weekend,” Esparza said.

The dollar index, which compares the greenback against six other major currencies, was up 0.17% at 98.415.