Global stocks climb on Huawei extension, buoying US Treasuries

Trader work on the floor at the New York Stock Exchange November 18, 2019. — Reuters pic
Trader work on the floor at the New York Stock Exchange November 18, 2019. — Reuters pic

NEW YORK, Nov 19 — Global equity markets edged higher yesterday, lifting prices of US government debt, as a 90-day extension allowing US companies to do business with China’s Huawei eased the latest spike in investor angst over US-Sino trade tensions.

The three major US stock indexes set closing highs for a second straight session, while MSCI’s gauge of world equity markets also edged up to less than 1 per cent from a record peak set in January 2018.

The stock rally reversed early losses sparked by conflicting reports about the outlook for ending the 16-month trade war between the world’s two largest economies that has weighed on global growth and roiled capital markets.

The US Commerce Department added Huawei Technologies Co Ltd to an economic blacklist in May, citing security concerns, but has allowed it to purchase some American-made goods in a series of 90-day license extensions.

Early yesterday, a CNBC report cast fresh doubts on the prospects for phase one of a US-China trade deal, saying the mood in Beijing was pessimistic due to President Donald Trump’s reluctance to roll back tariffs on Chinese imports.

The report halted rallies in Europe and Asia after Chinese state media Xinhua over the weekend said Washington and Beijing had held “constructive” talks.

“Progress doesn’t happen in a straight line and that is starting to frustrate people today,” said Scott Ladner, chief investment officer at Horizon Investments in Raleigh, North Carolina. “It feels very herky-jerky.”

MSCI’s all-country world index of global stock performance gained 0.15 per cent.

In Europe, the pan-European STOXX 600 index closed down 0.01 per cent, while the FTSEurofirst 300 index of leading regional shares fell 0.04 per cent. Both are trading at four-year highs.

On Wall Street, the Dow Jones Industrial Average rose 31.33 points, or 0.11 per cent, to 28,036.22. The S&P 500 gained 1.57 points, or 0.05 per cent, to 3,122.03 and the Nasdaq Composite added 9.11 points, or 0.11 per cent, to 8,549.94.

The safe-haven Japanese yen gained and gold prices erased losses to settle slightly higher.

Investors hope that tariffs the United States and China have imposed on each other’s goods will be rolled back as they are seen as harming global economic growth.

Overnight in Asia, stocks closed higher.

Tokyo’s Nikkei gained 0.49 per cent and China’s blue-chip CSI300 index rose 0.8 per cent after the People’s Bank of China, in a surprise move, said it was lowering the seven-day reverse repurchase rate.

The dollar index fell 0.19 per cent, with the euro up 0.2 per cent to US$1.1072 (RM4.59). The yen strengthened 0.09 per cent versus the greenback at 108.69 per dollar.

The price of benchmark 10-year US Treasury notes rose 5/32 to push yields down to 1.8152 per cent.

US gold futures settled up 0.2 per cent at US$1,471.90 an ounce.

Concerns about plentiful crude supplies in 2020 weighed on the oil market, which expects the Organisation of the Petroleum Exporting Countries to extend production cuts in early December to help avoid a new global glut.

Brent crude futures fell 86 cents to settle at US$62.44 per barrel. West Texas Intermediate (WTI) crude slid 67 cents to settle down at US$57.05 a barrel. — Reuters

Related Articles