US stocks hit record highs on signs of trade war thaw

US stocks hit record highs, and Treasury bonds sold off, following reports the US and China agreed in principle to remove some tariffs imposed during their trade spat.

The S&P 500 was up 0.6 per cent in morning trade, and not far off its new intraday record of 3,097.15 and putting it on track to edge past Monday’s closing peak of 3,078.27.

The Nasdaq Composite was up 0.8 per cent and the Dow Jones Industrial Average added 0.9 per cent, having also chalked up new intraday peaks.

The yield on the benchmark 10- year US Treasury rocketed 10.5 basis points higher to 1.9173 per cent, while that on the policysensitive two-year was up 5.8bp to 1.6652 per cent.

China’s commerce ministry spokesperson told reporters in Beijing on Thursday negotiators from the two countries had agreed “to remove some of the additional tariffs in phases”, according to China’s state media, adding the gradual removal of those levies “can help to stabilise market expectations.”

That helped soothe nerves following a report by Reuters on Wednesday saying a meeting between Donald Trump and his Xi Jinping, his Chinese counterpart, to sign a “phase one” trade deal that had originally been lined up for this month would be delayed until December.

European markets were also buoyed by the reports of tariff removal. The continent’s broad Stoxx 600 was up 0.3 per cent, Germany’s Dax jumped 0.8 per cent and London’s FTSE 100 added 0.1 per cent.

In Asia, Hong Kong’s Hang Seng index turned to close 0.6 per cent higher. The CSI 300 of Shanghai- and Shenzhen-listed stocks added 0.2 per cent. In Japan, the Topix was holding at a one-year high and the Kospi in South Korea was flat.

China’s onshore renminbi reversed earlier declines to swing below the 7 threshold. The currency was 0.3 per cent stronger at Rmb6.9746 per dollar, after crossing below the key seven to the buck level in the week.

The dollar index, a measure of the greenback against a basket of peers, was 0.2 per cent firmer to 98.127.