World stocks rise amid US-China trade hopes; dollar down vs peers

Oil gains on OPEC report; gold edges up

NEW YORK, May 14, (Agencies): A gauge of stocks around the world rose to its highest point in about two months on Monday amid hopes for improving trade relations between the United States and China, while the US dollar weakened for a fourth straight session against a basket of currencies.

MSCI’s index of stocks across the globe gained 0.22 percent, hitting a roughly two-month high during the session.

Growing trade tensions have worried investors, with concerns about a global trade war feeding into increased volatility in the stock market in recent months.

Wall Street’s main indexes edged higher in afternoon trading, pulling back from stronger gains earlier in the session.

The Dow Jones Industrial Average rose 85.61 points, or 0.34 percent, to 24,916.78, the S&P 500 gained 4.08 points, or 0.15 percent, to 2,731.8 and the Nasdaq Composite added 17.99 points, or 0.24 percent, to 7,420.87.

Shares of optical components makers Acacia Communications and Oclaro Inc rallied following the ZTE news.

In Asia, Shanghai’s SSE Composite index rose 0.3 percent, Hong Kong’s Hang Seng index climbed 1.4 percent, and Japan’s Nikkei rose 0.5 percent.

Investors also pointed to improving sentiment about geopolitical tensions involving North Korea. US Secretary of State Mike Pompeo said on Sunday that Washington would agree to lift sanctions on North Korea if the country agrees to dismantle its nuclear weapons program, a move that would create economic prosperity that “will rival” that of South Korea.

The pan-European FTSEurofirst 300 index lost 0.04 percent.

The dollar fell as investors questioned whether a rally that last week sent the greenback to more than fourmonth highs had run out of steam.

The dollar index fell 0.09 percent, with the euro up 0.17 percent to $1.1962.

Oil prices rose as OPEC reported that the global oil glut has been virtually eliminated, while US crude’s discount to global benchmark Brent widened to its deepest in nearly five months.

US crude rose 0.34 percent to $70.94 per barrel and Brent was last at $78.16, up 1.35 percent on the day.

US

US stocks rose on Monday on signs of easing trade tensions between the United States and China after President Donald Trump softened his stance on Chinese technology company ZTE Corp.

Shares of some of the biggest suppliers to ZTE, including Acacia Communications, Oclaro and Lumentum Holdings, rose between 10.6 percent and 3.1 percent.

Chip stocks got a boost from news that China had resumed its review of chipmaker Qualcomm’s proposed $44 billion takeover of NXP Semiconductors. NXP surged 14.2 percent and Qualcomm 3 percent.

The Philadelphia semiconductor index was up 1.6 percent.

At 12:53 pm ET, the Dow Jones Industrial Average was up 102.65 points, or 0.41 percent, at 24,933.82, the S&P 500 was up 5.79 points, or 0.21 percent, at 2,733.51 and the Nasdaq Composite was up 28.55 points, or 0.39 percent, at 7,431.43.

The defensive utilities, telecoms and real estate were the only three losers among the major S&P sectors, while technology and healthcare indexes were the biggest boosts.

Energy stocks were the biggest percentage gainers, rising 0.8 percent as oil rose after OPEC reported that the global oil glut has been virtually eliminated.

Xerox tumbled 5.7 percent after the US photocopier maker scrapped a planned $6.1 billion deal with Fujifilm Holdings.

Viacom Inc declined 6.7 percent after CBS Corp filed a lawsuit to stop controlling shareholder Shari Redstone from continuing with her plan to merge it with Viacom. CBS rose 3.2 percent.

Advancing issues outnumbered decliners for a 1.19-to-1 ratio on the NYSE and for a 1.04-to-1 ratio on the Nasdaq.

The S&P index recorded 24 new 52-week highs and two new lows, while the Nasdaq recorded 106 new highs and 27 new lows.

Europe

Weak financial stocks weighed on European shares on Monday after a strong run of weekly gains, while dealmaking livened up trading with Portugal’s EDP and Britain’s IWG both jumping on takeover offers.

The pan-European STOXX 600 index dipped 0.1 percent, while Italy’s FTSE MIB edged up 0.3 percent after a volatile session as investors kept close tabs on talks between the anti-establishment 5-Star Movement and the farright League to form a coalition government.

M&A dominated trading, continuing a trend which has set 2018 up to be one of the strongest years yet for dealmaking volumes. EDP shares climbed 9.3 percent after China’s state-owned utility China Three Gorges offered $10.8 billion to take control of the Portuguese power firm.

The stock ended above the bid price, which offered a premium of just under 5 percent to its closing price on Friday.

Shares in IWG shot up 22.8 percent to the top of the STOXX after the British workspace provider said it had been approached for a takeover by three rival suitors.

In results-driven moves, Dutch bank ABN Amro fell 6 percent, dragging the financials sector down. It reported a drop in first-quarter net profit due to ongoing problems in the oil sector, leading to impairments on loans to shipping and offshore services clients.

Healthcare stocks were the best-performing, following a rally in US pharma on Friday after investors found US President Trump’s speech on drug prices less harmful than expected for pharma companies’ business models.

The healthcare sector index climbed 1 percent.

Easing US-China trade tensions failed to boost European markets, and Trump’s U-turn on Chinese phone company ZTE, the world’s 4th largest telecom equipment vendor, actually sent Nokia shares down 1 percent, while Ericsson fell 1.1 percent.

Investors had hoped the Nordic telecom equipment companies would see stronger sales and margins after the US Commerce Department banned American supplies to ZTE and the firm suspended operations.

With three-quarters of the MSCI Europe index having reported earnings, energy stocks were leading the market by far, with year-on-year earnings growth of 10.5 percent while the overall market’s earnings growth was flat in euro terms.

The STOXX 600 oil & gas index rose 0.5 percent, reversing earlier as OPEC reported that the global oil glut has been virtually eliminated, lifting crude prices.

Asia

Most Asia markets rose Monday as investors built on last week’s rally, with another healthy lead from Wall Street providing support, but oil prices retreated from their three-and-a-halfyear highs.

Malaysia’s ringgit recovered from an early sell-off to sit flat while stocks were up more than one percent in Kuala Lumpur as trading resumed after last week’s general election that saw a shock win for 92-year-old former premier Mahathir Mohamad.

Hong Kong led gains in Asia Monday, surging 1.4 percent, while Shanghai added 0.3 percent.

Tokyo ended up 0.5 percent, with Fujifilm climbing 1.6 percent after US photocopier and printer maker Xerox pulled out of a $6.1-billion merger deal. Analysts said the move was welcomed by traders who thought the deal was not good for Fujifilm.

Sydney added 0.3 percent and Wellington gained 0.4 percent while Taipei piled on 0.9 percent.

However, Seoul and Singapore were slightly down.

Key figures around 0810 GMT Tokyo - Nikkei 225: UP 0.5 percent at 22,865.86 (close)

Hong Kong - Hang Seng: UP 1.4 percent at 31,541.08 (close)

Shanghai - Composite: UP 0.3 percent at 3,174.03 (close)

Dollar/yen: UP at 109.35 yen from 109.29 yen

Oil

Oil prices steadied below 3-1/2 year highs on Monday as resistance emerged in Europe and Asia to US sanctions against major crude exporter Iran, while rising US drilling pointed to higher North American production.

Brent crude was up 20 cents at $77.32 a barrel by 1315 GMT and US light crude rose 10 cents to $70.80.

Both oil futures contracts hit their highest since November 2014 last week at $78 and $71.89 a barrel respectively as markets anticipated a sharp fall in Iranian crude supply once US sanctions bite later this year.

It is unclear how hard US sanctions will hit Iran’s oil industry. A lot will depend on how other major oil consumers respond to Washington’s action against Tehran, which will take effect in November.

China, France, Russia, Britain, Germany and Iran all remain in the nuclear accord that placed controls on Iran’s nuclear programme and led to a relaxation of economic sanctions against Iran and companies doing business there.

Some oil analysts have said they expect Iranian crude exports to fall by as little as 200,000 barrels per day (bpd), while others put the figure closer to 1 million bpd.

Gold

Gold prices edged higher on Monday as the dollar retreated from a 2018 peak after subdued US inflation data last week highlighted the prospect of fewer US interest rate increases than previously expected this year.

Spot gold was up 0.2 percent at $1,320.8 an ounce at 1348 GMT, having on Friday touched $1,325.96, its highest since April 26. US gold futures were unchanged at $1,320.7.

A weaker US currency makes dollardenominated gold cheaper for holders of other currencies — a relationship used by funds to generate buy and sell signals.

Though the dollar eased on Monday, its performance against a basket of other major currencies touched 93.416 last week for a gain of more than 4 percent since April 17 and its highest level since December.

“Gold is dollar-driven but it is doing reasonably well given the dollar is generally stronger,” said Macquarie commodities strategist Matthew Turner.

Further support could come from rising security risks in the Middle East after the United States said it would withdraw from the 2015 international nuclear deal with Iran and reimpose sanctions.

However, gold is expected to remain in the narrow range in which it has been trading this year — mostly between $1,300 and $1,350 — unless supply or demand fundamentals change dramatically.