Stocks climb as China soars on optimism over trade

Bloomberg

US equity futures advanced alongside stocks in Europe and Asia after President Donald Trump postponed the date for boosting tariffs on Chinese imports, taken as a sign of progress in the trade talks. Bonds fell and the dollar retreated.
Contracts on the Dow, Nasdaq and S&P all climbed, while the trade headlines boosted carmakers in Europe, fueling an advance in the Stoxx Europe 600 Index. Treasuries and core European bonds slipped, while Italy’s securities advanced. General Electric shares soared in premarket trading after the company agreed to sell its bio-pharma business for a total consideration of $21.4 billion.
In Asia, the Shanghai Stock Exchange Composite Index rallied the most since 2015 and the yuan strengthened after Trump said he will delay the March 1 trade deadline, and as comments from China President Xi Jinping suggested top officials will focus on growth rather than cracking down
on leverage. Emerging-market currencies and shares advanced despite China’s state-run Xinhua news agency later publishing a commentary saying talks will be harder at the final stage.
“This is a sigh of relief,” Ben Emons, managing director for global macro strategy at Medley Global Advisors, told Bloomberg TV. “Markets will still keep a level of caution, but this news is encouraging.”
The official delay from the US may give fresh impetus to extend a global rally in equities that was being tested amid an uncertain future on global trade and forecasts for global economic growth to ebb. Also in focus this week will be a hearing from Federal Reserve Chairman Jerome Powell, where investors will get the latest read on monetary policy.
Trump said the trade talks were productive. “The US has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues,” he said in a Twitter posting on Sunday evening.
Elsewhere, Brent fell after Trump said in a tweet that prices were too high, while copper held on to gains over Chinese optimism. Gold was steady, with Newmont Mining climbing in the premarket on a hostile bid from rival Barrick Gold. The pound was little changed versus the euro as UK Prime Minister Theresa May pushed back the deadline for Parliament to vote on her Brexit deal.

US Index Futures Rise
US stocks have rallied 19 percent since hitting the brink of a bear market on Christmas Eve with sentiment lifted by the Federal Reserve taking a more dovish stance and progress in the trade spat with China. The latest round of negotiations in Washington was extended into the weekend as China offered to buy more American goods such as agricultural products and energy in a bid to meet Trump’s demand to shrink the US trade deficit.
The optimism since the December low could quickly turn to pessimism as there still isn’t any deal on the underlying structural issues that the Washington trade hawks are asking for, said Eleanor Creagh, a Sydney-based market strategist at Saxo Capital Markets.
“That’s what the markets are really looking for now,” she said by phone. “We could certainly see some of the optimism being baked in since those December lows being erased.”

Currencies
The Bloomberg Dollar Spot Index dipped 0.1 percent to the lowest in almost three weeks. The euro gained 0.2 percent to $1.1356, the strongest in almost three weeks, while the Japanese yen decreased 0.1 percent to 110.78 per dollar.
The MSCI Emerging Markets Currency Index rose 0.4 percent to 1,652.17, the highest in more than three weeks.
South Africa’s rand rose 0.9 percent to 13.8811 per dollar, the strongest in almost two weeks on the largest rise in almost four weeks.