Global stocks climb on optimism over US-China talks; dollar gains

Oil rises after Saudi output pledge, falling US inventories

NEW YORK, Feb 13, (Agencies): Stocks extended their gains in early trading on Wall Street Wednesday as investors remain optimistic that the US and China will make more progress in resolving their trade dispute.

Key officials from the world’s two largest economies will meet Thursday and Friday to try and stave off an escalation of a conflict that has hurt companies and consumers by raising prices on a number of products. President Donald Trump has said he might let a March 2 deadline slide if the countries get close to a deal.

The Dow Jones Industrial Average rose 173 points, or 0.7 percent, to 25,596 points as of 10 a.m. The S&P 500 index rose 0.6 percent and the Nasdaq composite rose 0.5 percent.

Stocks in Europe rose broadly, despite a report of slumping industrial output across the 19 countries that use the euro. Asian markets were also higher.

US

US stocks extended a rally from the prior session on Wednesday, powered by rising expectations that the United States and China could strike a deal during their ongoing trade talks, with benign inflation data also lifting sentiment.

The data pushed US treasury yields higher, helping the financials sector rise 0.90, which provided the biggest boost to the S&P 500 index.

At 11:02 am ET, the Dow Jones Industrial Average was up 193.35 points, or 0.76 percent, at 25,619.11. The S&P 500 was up 15.39 points, or 0.56 percent, at 2,760.12 and the Nasdaq Composite was up 28.37 points, or 0.38 percent, at 7,442.99.

Only the utilities sector was trading lower.

Analysts’ expectations for firstquarter profit have turned sour, after a largely upbeat fourth-quarter earnings. They now estimate current-quarter profit to decline 0.3 percent, which would be the first loss since the second quarter of 2016.

Dish Network Corp dropped 7.4 percent, the most among S&P companies, after the US satellite TV service provider lost more-than-expected pay-TV subscribers in the fourth quarter.

TripAdvisor Inc was a close second, down 7.3 percent as the online travel company’s quarterly profit missed estimates.

Activision Blizzard Inc rose 5.2 percent after the videogame maker announced a share buyback plan, job cuts and investments to boost its pipeline.

Advancing issues outnumbered decliners by a 1.94-to-1 ratio on the NYSE and by a 1.56-to-1 ratio on the Nasdaq.

The S&P index recorded 33 new 52week highs and no new low, while the Nasdaq recorded 55 new highs and nine new lows.

UK

Britain’s FTSE 100 rose on Wednesday as positive results and hopes of a possible delay to exit from the European Union lifted housebuilders, while packaging firms DS Smith and Smurfit Kappa were boosted by the latter’s earnings.

The FTSE index was up 0.4 percent and the midcaps were 0.7 percent higher by 0950 GMT.

Housebuilders Persimmon, Barratt and Taylor Wimpey - among those most vulnerable to a no-deal Brexit - were among the biggest gainers after midcap Galliford Try reported higher first-half profit that topped Liberum estimates.

Galliford led the FTSE 250 with a 5.3 percent gain, hitting its highest since end-November.

Global miners were on course for their best day so far this month as London copper prices were headed for their first session of gain in five.

The best FTSE 100 performer was packaging group DS Smith which rose 4 percent as rival Smurfit Kappa said the current year had started positively after reporting strong results. London-listed shares of Smurfit Kappa also added 2.5 percent.

Rolls-Royce followed with a 2.5 percent gain. It rose to a four-month high after a rating upgrade from Credit Suisse.

Tour operator TUI underperformed with a 3.7 percent fall, extending losses from the previous session when it posted a bigger first-quarter loss.

In a similar vein, online trading platform Plus500 declined 4.4 percent after losing nearly one-third in value on Tuesday when it issued a profit warning.

Supporting the midcaps was Dunelm that rose 4 percent after reporting a jump in first-half earnings.

Europe

European shares edged up on Wednesday as optimism about Washington and Beijing trade talks lifted global markets and data showed earnings growth forecasts for Europe are stabilising after steep downward revisions.

The pan-European STOXX 600 was up 0.3 percent at 0943 GMT, with Germany’s trade-sensitive DAX up 0.2 percent.

Madrid’s IBEX was slightly lagging its peers, down 0.1 percent, amid reports that Spain’s minority Socialist government could announce an early general election if it loses a budget vote following its refusal to negotiate Catalan selfdetermination.

Dutch bank ABN Amro, hit by loan impairments, fell 6.3 percent with fourth-quarter net profit way below analysts.

Dutch blue chip peer Heineken had a totally different welcome from the market, rising 4.3 percent and set for its best day since 2015 on better-than-expected results.

Still in the Netherlands, paint maker Akzo Nobel jumped 3.9 percent after marginally beating expectations.

Amundi, the euro zone’s largest asset manager, was also cheered by investors, rising 4.3 percent, after confirming its profit targets for 2020 despite adverse market conditions in the fourth quarter.

Among other companies whose results stood out in morning trading was Ingenico, up 7.2, online gambling firm Kindred Group, up 5.8 percent and Swedish Match which rose 7.5 percent, the top gainer of the STOXX 600.

Asia

Asian shares were mostly higher Wednesday, cheered by prospects for a resolution of the costly trade dispute between the US and China.

The region tracked gains overnight on Wall Street, with Japan’s benchmark Nikkei 225 adding 1.4 percent to 21,148.36 and Hong Kong’s Hang Seng up 1.1 percent at 28,484.49. The Shanghai Composite index jumped 1.6 percent to 2,714.12.

In other markets, Australia’s S&P/ ASX 200 slipped 0.3 percent to 6,063.60 and South Korea’s Kospi edged up 0.4 percent to 2,198.57. Shares were mostly higher in Southeast Asia.

The dollar rose to 110.59 yen from 110.50 yen Tuesday. The euro strengthened to $1.1337 from $1.1285.

Oil

Brent oil prices rose on Wednesday, after top exporter Saudi Arabia said it would cut crude exports and deliver an even deeper cut to its production, while US futures gained on a decline in domestic oil inventories.

Brent crude futures were up 77 cents at $63.19 a barrel by 1225 GMT, while US crude oil futures rose 53 cents to $53.63 a barrel.

“The feel-good factor is back in play but oil bulls are by no means out of the woods yet,” PVM Oil Associates Stephen Brennock said.

“It is a well-known fact that the world economy is losing momentum amid a plethora of downside risks including lingering US-China trade tensions and geopolitical uncertainty.”

The Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday that it had cut its output by almost 800,000 bpd in January to 30.81 million bpd.

Most of that reduction has been thanks to Saudi Arabia. Energy minister Khalid al-Falih on Tuesday told the Financial Times production would fall below 10 million bpd in March, more than half a million bpd below the target it agreed to as part of a global deal to limit supply.

US restrictions on Venezuela’s energy sector have crippled exports and threaten to remove some 330,000 bpd in supply from the market this year, according to Goldman Sachs.

The oil price has risen by 20 percent so far this year, yet most of that increase materialised in early January, before the imposition of US sanctions on Venezuela’s energy sector.

The global oil market remains well supplied, the International Energy Agency said in its monthly market report on Wednesday and output would still likely outstrip demand this year, despite OPEC’s efforts and US sanctions on Iran and Venezuela.

“Oil prices have not increased alarmingly because the market is still working off the surpluses built up in the second half of 2018,” the IEA said.

“In quantity terms, in 2019, the US alone will grow its crude oil production by more than Venezuela’s current output. In quality terms, it is more complicated. Quality matters.”

Venezuela has tried to find alternative customers, especially in Asia, but under US pressure many buyers there are also shying away from dealing with PDVSA.

In the United States, crude inventories fell by 998,000 barrels in the latest week, trouncing forecasts for a rise of 2.7 million barrels, according to data from industry group the American Petroleum Institute on Tuesday.

US crude output is expected to grow by 1.45 million bpd this year and by another 790,000 bpd next year to hit 13 million bpd in 2020, according to the Energy Information Administration.

Currencies

The US dollar rose modestly on Wednesday morning after a measure of inflation excluding energy prices rose, prompting the greenback to reverse the prior day’s pullback.

The Labor Department reported that its Consumer Price Index was unchanged for the third straight month in January, held down by cheaper gasoline. But excluding the volatile food and energy components, the CPI gained 0.2 percent, rising by the same margin for a fifth straight month.

In the latest 12-month period, the socalled core CPI rose 2.2 percent for a third straight month. Evidence of inflation can increase the value of the dollar by raising expectations that the Federal Reserve will tighten monetary policy.

The dollar fell on Tuesday as investors put money in riskier assets on rising hopes of a breakthrough in US-China trade talks. It had gained for eight consecutive sessions at the end of Monday, the most since February 2017.

Risk appetite remained elevated on Wednesday, yet the morning’s inflation print nevertheless kept the safe-haven dollar elevated.

Jane Foley, currencies strategist at Rabobank, cautioned that there was “a lot of evidence that global growth is slowing and a lot of evidence to be suspicious of an end to the US-China trade war.”

“There will still be a long way to go,” she added.

The dollar index rose by 0.16 percent to 96.863. It stood at $1.130 against the euro, slightly firmer.

The New Zealand dollar and Sweden’s crown rose after their central banks broke with the growing caution of the world’s major monetary-policy makers, surprising traders who had expected more dovish signals.