Stocks advance on hopes of fresh trade deal; dollar dips

Bloomberg

US index futures jumped along with stocks in Europe as China revived hopes of progress in trade talks with America this week despite a host of potential headwinds. Gold slipped with Treasuries.
Contracts on the S&P 500, Dow Jones and Nasdaq 100 indexes extended gains after a report that China is still open to a partial trade deal with the US In Europe, technology companies and carmakers led a broad-based advance on the Stoxx Europe 600 index. Benchmark equity gauges had earlier fallen across Asia, except for those in Shanghai and Mumbai. The dollar weakened after two days of gains. Crude oil climbed.
High-level US-China trade talks are set to resume in Washington on Thursday even as relations have deteriorated between the two countries. While a broad agreement seems unlikely, China signaled it’s open to a limited deal, provided no more tariffs are imposed by President Donald Trump, according to an official. In return, Beijing would offer non-core concessions like purchases of agricultural products without giving in on major sticking points, the official said, without offering further details.
The Trump administration slapped visa bans on some Chinese officials and placed a number of Chinese technology firms on a blacklist. Bloomberg also reported the White House is moving ahead with discussions about restricting US government pension investments in China.
The latest US-China flare-up overshadowed comments by Federal Reserve Chairman Jerome Powell, who said the central bank will resume purchases of Treasury securities to avoid a repeat of recent turmoil in money markets, while hinting at the possibility of another rate cut. Minutes of the Fed’s last rates meeting will be released tonight, providing further insight into policy makers’ thinking ahead of their next meeting at the end of the month.
“Judging from this week’s US onslaught on Chinese firms, trade negotiations are going to prove less constructive than thought, intensifying risks to global growth,” said Nema Ramkhelawan-Bhana, an economist at FirstRand Bank in Johannesburg, in note to clients. “In the absence of fiscal expansion, countries will defer to central banks to cushion the blow by providing further policy accommodation.”
Elsewhere, the yuan climbed, helped by trade optimism and a stronger-than-expected fixing of the daily reference rate. West Texas crude rose above $53 a barrel. Turkey’s lira fluctuated as the country’s military began crossing the border into Syria as it had previously warned.
On Wednesday, minutes will be released from the last policy meeting of the Fed’s rate-setting committee.
The account of the European Central Bank’s last gathering is due on Thursday.
Chinese President Xi Jinping is scheduled to meet Indian Prime Minister Narendra Modi on Friday and Saturday for an informal summit.
The US releases a key measure of inflation on Thursday.
The Stoxx Europe 600 Index gained 0.4% in New York. Futures on the S&P 500 Index jumped 0.8%. The UK’s FTSE 100 Index rose 0.5%.
The MSCI All-Country World Index was little changed. The MSCI Emerging Market Index fell 0.3%
The Bloomberg Dollar Spot Index declined 0.1%. The euro rose 0.2% to $1.0983. The British pound climbed 0.1% to $1.2227. The Japanese yen depreciated 0.3% to 107.36 per dollar.
The yield on 10-year Treasuries gained two basis points to 1.55%. The yield on two-year Treasuries increased two basis points to 1.44%. Britain’s 10-year yield rose three basis points to 0.448%. Germany’s 10-year yield climbed three basis points to -0.57%. Japan’s 10-year yield climbed less than one basis point to -0.2%.