NEW YORK, Dec 20 ― Global equity markets extended a year-end rally yesterday that has pushed US and world stock benchmarks to record highs, while bond yields in Europe rose after Sweden stopped five years of negative interest rates, signaling the end of a sub-zero era.
Gold was little changed and the dollar was roughly flat as investors awaited US gross domestic product data today and investors shrugged off a report showing US factory activity in the mid-Atlantic region has nearly stalled this month.
Stocks got a boost after US Treasury Secretary Steven Mnuchin said the United States and China would sign their Phase One trade pact at the beginning of January. Mnuchin said it was completely finished and just undergoing a technical “scrub.”
The market shrugged off President Donald Trump's impeachment, as the Republican-controlled US Senate is widely expected to vote against removing him from office.
MSCI's gauge of stocks across the world gained 0.19 per cent, lifting the global benchmark to a record high, while the three major equity indexes on Wall Street hit intra-day and closing record highs.
Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey, noted the market angst caused by the lack of a signed US-China trade deal.
“That said, because we've gotten some positive comments from both Beijing and Washington, it seems we're likely close to getting a signing of the trade détente,” she said.
US stocks will maintain an upward bias until the start of 2020, when investors will look for more specific details in the trade agreement, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
The Dow Jones Industrial Average rose 137.68 points, or 0.49 per cent, to 28,376.96. The S&P 500 gained 14.23 points, or 0.45 per cent, to 3,205.37, and the Nasdaq Composite added 59.48 points, or 0.67 per cent, to 8,887.22.
Stocks in Europe edged higher. The pan-regional STOXX 600 index rose 0.17 per cent, and the blue-chip FTSEurofirst 300 index of regional shares closed up 0.14 per cent.
Emerging market stocks lost 0.22 per cent.
Earlier in Asia, stocks pulled back from a 1-1/2-year peak. Japan's Nikkei fell 0.3 per cent and China's stocks slipped for a second session despite trade optimism.
Sweden's Riksbank raised benchmark borrowing costs to zero from -0.25 per cent, making the central bank the first of those around the world that cut rates into negative territory to spur growth to inch back toward zero.
Bond yields rose across the euro zone. Those in higher-rated countries such as Germany, France and the Netherlands were up 3-4 basis points .
The yield on Germany's benchmark 10-year Bund rose to as much as -0.208 per cent, a six-month high, up from -0.30 per cent earlier in the week.
Policy rates are still negative at the European Central Bank and the Japanese, Danish, Swiss and Hungarian central banks. With the exception of Hungary, all are expected to remain so for some time.
Oil prices hovered near the highest in three months in thin pre-Christmas trading, buoyed by Wednesday's news that US crude inventories declined and as US-China trade tensions continued to ease.
Brent crude futures rose 37 cents to settle at US$66.54 (RM275.56) a barrel, heading for a sixth straight day of gains. US West Texas Intermediate (WTI) crude settled up 29 cents at US$61.22 a barrel.
The dollar index fell 0.01 per cent, with the euro up 0.1 per cent to US$1.1122. The Japanese yen strengthened 0.20 per cent versus the greenback at 109.32 per dollar.
The Swedish crown rose 0.09 per cent versus the greenback at 9.41 per dollar.
Benchmark 10-year notes last rose 2/32 in price to yield 1.9169 per cent.
US gold futures settled 0.4 per cent higher to US$1,484.40 an ounce. ― Reuters
