NEW YORK, Nov 5 ― The dollar strengthened and global stock markets rallied yesterday on signs the United States and China are nearing the end of a damaging trade war as well as indications the world economy may dodge a recession.
The three major US stock indexes closed at fresh record highs and MSCI's gauge of equity performance across the globe rose to less than 2 per cent from an all-time peak set in January 2018.
Beijing and Washington spoke Friday of progress in trade talks and US Commerce Secretary Wilbur Ross said on Sunday licenses for US companies to sell components to China's blacklisted Huawei Technologies Co will come shortly.
Washington has effectively banned federal agencies from buying Huawei telecommunications equipment and barred US companies from doing business with Huawei, citing national security.
Gold edged lower while the dollar gained on higher risk appetite as trade hopes grew after Ross said there was no reason a deal could not be on track for signing this month.
A generally upbeat US employment report on Friday raised optimism a slowing US economy was not headed toward recession.
“Market trends are being influenced by a better risk mood overall,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
European shares rallied more than 1 per cent, with many reaching their highest level since January 2018. The STOXX 600 index of small, mid-sized and large companies across Europe surged to highs last seen in July 2015.
Tariff-exposed European miners gained 2.9 per cent while auto stocks also rose 2.9 per cent. Reports that Fiat Chrysler and Peugeot owner PSA aimed to sign a final merger agreement as early as next month also lifted stocks.
Earlier, trade hopes sent Asian stocks surging, with MSCI's broadest index of Asia-Pacific shares outside Japan rising 1.3 per cent.
Technology stocks boosted Wall Street, with the Philadelphia Semiconductor index hitting a new high, up 2.2 per cent.
MSCI's gauge of stocks across the globe gained 0.54 per cent while its emerging markets rose 1.46 per cent.
“Signing these deals takes time. All that is needed for markets to be happy right now is for an agreement to be announced,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
On Wall Street, the Dow Jones Industrial Average rose 114.75 points, or 0.42 per cent, to 27,462.11. The S&P 500 gained 11.36 points, or 0.37 per cent, to 3,078.27 and the Nasdaq Composite added 46.80 points, or 0.56 per cent, to 8,433.20.
The euro slipped as investors awaited Christine Lagarde's first speech as European Central Bank president. But the single currency remained near multiple-week highs after Ross said Washington may not slap tariffs on imported vehicles after “good conversations” with automakers in the European Union, Japan and Korea.
The dollar index rose 0.31 per cent, with the euro down 0.34 per cent to US$1.1127 (RM4.62). The Japanese yen weakened 0.37 per cent versus the greenback at 108.57 per dollar.
Euro zone and US bond yields rose on optimism a US-China trade deal appeared near.
Data yesterday showed morale among investors in the euro zone jumped in November to its highest since June.
Germany's benchmark 10-year Bund yield rose to -0.35 per cent while the benchmark 10-year US Treasury note fell 14/32 in price to push its yield up to 1.7770 per cent.
Oil prices rose, buoyed by an improved outlook for crude demand as better-than-expected US jobs growth fed hopes.
Brent crude futures for January rose 44 cents to settle at US$62.13 a barrel. US crude futures settled up 34 cents at US$56.54 a barrel.
Spot gold dropped 0.4 per cent to US$1,507.25 an ounce. ― Reuters