Stocks gain on US-China trade hopes, dollar flat

Optimism was tempered by a Wall Street Journal report that Xi planned to present Trump with a set of terms Washington should meet before Beijing is ready to settle.— Reuters pic
Optimism was tempered by a Wall Street Journal report that Xi planned to present Trump with a set of terms Washington should meet before Beijing is ready to settle.— Reuters pic

NEW YORK, June 28 — Global equity markets gained and the dollar held steady on Thursday ahead of the G20 summit where a scheduled meeting of US President Donald Trump and Chinese President Xi Jinping has stirred hopes that trade tensions could ease.

White House economic adviser Larry Kudlow told Fox News there were no preconditions and nothing was agreed before the Trump-Xi meeting on Saturday. Earlier, a Hong Kong report indicated a truce had been reached, which eased worries Trump would impose new tariffs on US$300 billion in Chinese goods.

The trade war has crimped manufacturing and begun to slow growth, so hopes for a truce rekindled investor interest in riskier assets and weighed on safe havens.

Optimism was tempered by a Wall Street Journal report that Xi planned to present Trump with a set of terms Washington should meet before Beijing is ready to settle.

“I continue to be very skeptical that the US, at least this current administration, will reach a deal with China,” said Kristina Hooper, chief global market strategist at Invesco in New York.

“I can’t find any compelling reasons why China would make real concessions to the US,” Hooper said.

The dollar index, which tracks the dollar against the euro, Japanese yen, sterling and three other currencies, traded slightly lower at 96.200. The dollar was little changed against the euro and the yen.

MSCI’s gauge of stocks across the globe gained 0.42 per cent, while both the pan-European STOXX 600 index and the FTSEurofirst 300 index of leading regional shares closed basically at break-even.

Stocks on Wall Street mostly gained, though the Dow industrials closed slightly lower.

The Dow Jones Industrial Average fell 10.24 points, or 0.04 per cent, to 26,526.58. The S&P 500 gained 11.14 points, or 0.38 per cent, to 2,924.92 and the Nasdaq Composite added 57.79 points, or 0.73 per cent, to 7,967.76.

Healthcare rose 0.62 per cent and financials gained 0.92 per cent, with big lenders leading the charge ahead of results of the second part of the Federal Reserve’s annual stress test for banks.

Semiconductor companies, which have a sizable revenue exposure to China, traded higher, with the Philadelphia Semiconductor index rising 1.47 per cent.

US Treasury debt yields fell on concerns that trade discussions between the United States and China on Saturday may be more complicated than previously expected.

News headlines suggest that “the meeting in Osaka is going to be a lot more tense than some of the initial optimism suggested,” said Ian Lyngen, head of US rates strategy at BMO Capital Markets in New York.

The benchmark 10-year US Treasury note rose 10/32 in price to push its yield lower to 2.0140 per cent.

German government bond yields fell back toward record lows after data showed annual inflation in the euro zone’s biggest economy remained well below the European Central Bank’s target.

Germany’s 10-year bond yield was down 1.2 basis points at minus 0.32 per cent, nearing Tuesday’s record low of minus 0.336 per cent.

Oil prices settled little changed, weighed by concerns over whether the G20 summit will produce a breakthrough on trade and perceptions that supply is ample despite prospects for continued curbs by the Organisation of Petroleum Exporting Countries.

Brent crude, the global benchmark, rose 6 cents to settle at US$66.55 (RM275.69) a barrel. US West Texas Intermediate crude settled up 5 cents to US$59.43.

US gold futures settled 0.2 per cent lower at US$1,412 an ounce. — Reuters