World stocks rally on progress in trade talks
INVESTORS PULL OUT OF SAFETY OF GOVERNMENT BONDS
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Progress in the USChina trade talks helped send world stock markets broadly higher yesterday and pulled investors out of the safety of government bonds.
Europe’s broad Stoxx 600 index rallied 1.3 per cent. In early trading on Wall Street, the Dow Jones Industrial Average rose 303.2 points, or 1.19 per cent, to 25,742.59, the S&P 500 gained 22.14 points, or 0.81 per cent, to 2,767.87 and the Nasdaq Composite added 31.40 points, or 0.42 per cent, to 7,458.35 in morning trading.
China and the United States reached a consensus in principle on some key issues during the talks, China’s state news agency Xinhua said yesterday. Negotiations will continue this week in Washington as investors hope for an end to the trade war between the world’s two largest economies.
“The next potential steps in the US protectionist push could be pivotal for the global Rally in Europe’s broad Stoxx 600 index yesterday Gain in Dow Jones Industrial Average in early trading
outlook,” Bank of America Merrill Lynch economists wrote in a note. “With the trade war already starting to hurt the US, we expect the Trump Administration to pull its punch.”
MSCI’s gauge of stocks across the globe gained 0.57 per cent. The index is up nearly 9 per cent for the year.
Emerging markets were set for their first back-to-back weekly loss since late last year. The MSCIEF index of emergingmarket stocks dropped 0.7 per cent, leaving it up approximately the year.
Though there were signs of progress in the trade discussions, some investors remained cautious on whether tariffs would soon be eliminated. 7.6 per cent
longer-term direction
for
“We expect that the longerterm direction of tariffs on imports from China is likely to be downward, but we expect this to be a gradual process and believe that some of the recently imposed tariffs might still be in effect through the 2020 election,” economists at Goldman Sachs wrote in a note.
The broad stock rallies helped pull investors out of the safety of government bonds, sending yields higher. Benchmark 10-year US Treasury notes last fell 2/32 in price to yield 2.6644 per cent, from 2.659 per cent late on Thursday.
The dollar index rose 0.11 per cent, with the euro down 0.28 per cent to $1.1267.