Stocks rise on trade truce bets; oil, lira shaken by Turkey move

Apple, Microsoft biggest boost to S&P 500

NEW YORK, Oct 9, (RTRS): Stocks gained on Wednesday on a report that China could yet agree to a partial trade deal with the United States despite recent tensions, while the prospect of a last-minute Brexit agreement between the European Union and Britain seemed as remote as ever.

Sterling was little changed against the dollar after losing nearly 1% over the past two sessions, while oil prices rose on trade optimism and after Turkey launched a military operation in northern Syria.

On Wall Street, the Dow Jones Industrial Average rose 146.5 points, or 0.56%, to 26,310.54, the S&P 500 gained 20.08 points, or 0.69%, to 2,913.14 and the Nasdaq Composite added 65.51 points, or 0.84%, to 7,889.29.

The pan-European STOXX 600 index rose 0.40% and MSCI’s gauge of stocks across the globe gained 0.39%.

Emerging market stocks lost 0.17%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.45% lower, while Japan’s Nikkei lost 0.61%.

The pound initially jumped after a British newspaper report said the EU would make a major concession in the negotiations, but the gains were quickly unwound as EU sources denied it.

Sterling was recently at $1.2217, flat on the day.

The dollar index fell 0.07%, with the euro up 0.21% to $1.0977.

The Japanese yen weakened 0.28% versus the greenback at 107.40 per dollar. The Turkish lira touched a near fourmonth low versus the dollar after Ankara launched a military operation against Kurdish fighters in northeast Syria just days after US troops pulled back from the area.

The Turkish currency lost 0.47% versus the dollar at 5.86.

Oil prices jumped as traders bet any easing of the US-China tensions would benefit global demand.

US crude rose 1.98% to $53.67 per barrel and Brent was last at $59.25, up 1.73% on the day.

Spot gold added 0.1% to $1,507.10 an ounce. US gold futures gained 0.58% to $1,512.60 an ounce.

US

Wall Street rose on Wednesday on the back of gains in technology stocks, as investor sentiment was boosted by reports indicating an ease in trade tensions between the United States and China ahead of pivotal talks on Thursday.

China was still open to agreeing to a partial trade deal with the United States, despite the inclusion of top Chinese artificial intelligence startups in a trade blacklist, according to a Bloomberg report.

Separately, the Financial Times said Beijing was offering to increase its annual purchases of US agricultural products.

Shares in Microsoft Corp and Apple Inc rose about 1% and were among the biggest boosts to the S&P 500 . The technology sector rose 1.08%.

Chipmakers with a sizable exposure to China also gained, with the Philadelphia SE Semiconductor index up 1.45%.

The session’s gains were broadbased, with all the major S&P 500 sectors trading higher and 27 of the 30 components of the blue-chip Dow Jones Industrial Average index in positive territory.

Johnson & Johnson’s shares fell 2.2% after a jury awarded $8 billion in punitive damages to a man who accused it of failing to warn that young men using its antipsychotic drug Risperdal could grow breasts.

Energy stocks also gained 1.3%, tracking an increase in oil prices.

Investors will now turn their eye to the third-quarter earnings season, which begins next week with US banks reporting, to gauge the health of the domestic economy.

Analysts expect the worst quarterly profit performance since 2016, with earnings for S&P 500 companies estimated to fall 3.1% from a year earlier, based on IBES data from Refinitiv.

At 11:25 am ET the Dow Jones Industrial Average was up 126.91 points, or 0.49%, at 26,290.95, the S&P 500 was up 18.97 points, or 0.66%, at 2,912.03 and the Nasdaq Composite was up 62.32 points, or 0.80%, at 7,886.10.

Shares in Netflix Inc fell 1.21%, after two brokerages cut price targets on the video streaming service provider’s shares.

Advancing issues outnumbered decliners for a 2.21-to-1 ratio on the NYSE and a 1.71-to-1 ratio on the Nasdaq.

UK

British shares lagged global markets on Wednesday as fears of damage from Brexit outweighed reports of China being open to a partial trade deal with the United States.

The FTSE 100, whose components make two-thirds of their earnings abroad, added 0.3% but trailed Wall Street and European markets as blue-chip housebuilders and retailers fell.

The FTSE 250 index, which has a greater domestic exposure, ended 0.2% lower.

Supermarket chains Sainsbury’s and Tesco lost 2.2% and 1.1%, respectively, while homebuilder Persimmon lost nearly 2% as a crucial deadline in the longdrawn out Brexit process looms.

Prime Minister Boris Johnson has repeatedly said that Britain will leave the European Union on Oct. 31 with or without a deal, leaving markets braced for a Brexit showdown.

Among the gainers, London Stock Exchange Group (LSE) added 3.2% to top the FTSE 100 leader-board, recouping some of the steep losses seen in the last session when Hong Kong Clearing and Exchange abandoned takeover plans.

Just Eat climbed 1% after orders at its Dutch rival Takeaway.com surged.

Financial sector stocks rose 0.6%. They have fallen 6% since the start of 2019, lagging a near 7% rise in the FTSE 100 over the same period and the only major sector with year-to-date losses.

Europe

German shares logged their best day in six weeks on Wednesday, leading the charge among European shares, as sentiment was lifted by signs of progress in US-China trade relations a day ahead of high-level talks between the two parties.

Exporter-heavy German shares added 1% and the pan-European STOXX 600 index rose 0.4% recovering from Tuesday’s 1% decline when hostility from both sides in the US-China dispute dented sentiment.

A year into it, headlines from the trade war continue to inject volatility into markets, with STOXX 600 index giving up as much as it gains, putting it on course for a barely changed week.

Trade-reliant sectors such as technology stocks, auto and part makers and some luxury goods stocks were among the biggest boosts to the index. Among the top performers was the owner of British gambling firm Ladbrokes, GVC Holdings Plc, which gained 5.1% after it raised its annual core earnings forecast for the second time in three months.

Along with a rally in Ryanair and easyJet after a day of steep falls, it lifted last session’s worst performing travel and leisure sector 0.5%.

London’s blue chips were among the markets that gained the least as the European Union said a Brexit deal was “very difficult” if not entirely impossible.

EU officials denied the bloc is preparing a major concession for Britain to secure a Brexit deal after a report by the Times newspaper said the EU was ready to offer a mechanism for the Northern Irish assembly to leave a new so-called Ireland backstop.

Asia

Shares slipped in Asia on Wednesday as tensions between the US and China flared ahead of talks aimed at resolving the trade war between the world’s two biggest economies.

An overnight sell-off on Wall Street added to the gloom. Technology companies, banks and healthcare stocks bore the brunt of the selling after the US blacklisted a group of Chinese companies, claiming that their technology plays a role in the repression of China’s Muslim minority groups.

Japan’s Nikkei 225 index lost 0.6% to 21,459.77 and the Hang Seng in Hong Kong dropped 0.7% to 25,705.87. The Shanghai Composite index edged 0.1% higher to 2,917.27. The Sensex in India picked up 0.1% to 37,546.77 while shares in Taiwan and Southeast Asia declined. South Korean and Malaysian markets were closed for holidays.

Oil

Oil rose on Wednesday following media reports that China was open to agreeing a partial trade deal with the United States, while Turkey’s military operation in northern Syria also supported prices as it could impact regional oil production.

Brent crude was up 97 cents at $59.21 a barrel by 1326 GMT, and US West Texas Intermediate crude was at $53.57, up 94 cents.

Negotiators from the United States and China, the world’s top two economies, will meet in Washington on Thursday in the latest effort to hammer out a deal aimed at ending a long-running trade dispute that has slowed global growth.

Turkey launched a military operation into Syria, President Tayyip Erdogan said, adding the offensive aimed to eliminate a “terror corridor” along the Turkish border.

Analysts say the attacks could impact the economy of the oil-producing Kurdistan region in Iraq, and energy prices.

Protests also threatened oil production in Ecuador and Iraq, members of the Organization of the Petroleum Exporting Countries.

Saudi Aramco Chief Executive Amin Nasser said there was no doubt Iran was behind September’s attacks on Saudi oil facilities, and warned such strikes may continue if there is no concerted international response.

Currencies

Sterling went on a roller coaster ride on Wednesday, jumping on reports of a breakthrough on the Irish backstop and then giving up its gains as hopes of progress on a key sticking point for a Brexit deal were dashed.

The pound spiked more than 0.5% against the US dollar after The Times newspaper said Brussels was prepared to offer a mechanism for the Northern Irish assembly to leave a new backstop after a number of years.

But it fell back when the chief whip of Northern Ireland’s Democratic Unionist Party said it would oppose any such mechanism and slipped further from the day’s highs when EU officials denied any such concession had been made.

The British currency was last trading a fraction lower on the day at 1.2210, after spiking to as much as $1.2292. It also touched a high of 89.38 pence against the euro but was last down 0.1% at 89.79 pence.

Sterling had been on the back foot in early London trading on media reports that British Prime Minister Boris Johnson faced a cabinet rebellion if he led Britain to a no-deal Brexit.

Johnson promised lawmakers that the next Conservative Party manifesto would contain a promise to avoid a nodeal exit, lawmaker Damian Green said later on Wednesday.

The Guardian also reported that the EU may offer to extend the Brexit deadline until June 2020.

Jane Foley, a senior foreign exchange strategist at Rabobank, said the Guardian article showed, “the odds increasing of a delay until summer next year”.

Weekly futures data showed that positions betting against the pound declined in the past week. But there were still more negative bets than positive ones, leaving the market vulnerable to a squeeze higher in the event of any favourable news.