Stocks jump with dollar as US-China trade tensions cool

Bloomberg

US stocks surged and the dollar strengthened against most major peers and as the Trump Administration sought to deescalate a trade rift with China. Treasury yields climbed as havens such as the yen and gold tumbled.
All major equity gauges were higher led by strength in technology companies. The greenback rose after Treasury Secretary Steven Mnuchin said that the US was “putting the trade war on hold,” amid progress in talks with China. West Texas crude reached the highest level since 2014.
The euro headed for a sixth day of declines after Italy’s two populist parties closed in on a pick for prime minister, while Italian bonds extended their decline. Media companies and retailers led advances in the Stoxx Europe 600 Index, though a number of countries are out for a holiday.
“The latest agreement suggests that in the end logic will prevail” between the US and China, said Athanasios Vamvakidis, Bank of America Merrill Lynch global head of G10 FX strategy, in an interview on Bloomberg Television. “This is good news for the dollar.”
The easing protectionist tensions will offer some respite to traders as they grapple with the impact of rising US interest rates and a stronger dollar. But the week ahead is loaded with risk events, including releases of the latest meeting minutes from both the Federal Reserve and European Central Bank, a slew of debt sales from the US and preliminary purchasing manager indexes from the euro zone.
Meanwhile, geopolitical stress lingers, with South Korea President Moon Jae-in visiting Washington to discuss North Korea and Brexit negotiations ongoing.
Elsewhere, emerging-market currencies continued to come under pressure, with Turkey’s lira falling around 2 percent.
Philadelphia Fed President Patrick Harker, Atlanta Fed President Raphael Bostic and Minneapolis Fed President Neel Kashkari all speak at various events early in the week. Brexit negotiations resume in Brussels on Tuesday, and South Korea’s president visits Washington to discuss North Korea. Also on Tuesday, Facebook CEO Mark Zuckerberg is to be grilled by the European Parliament on his company’s use of personal data.
The S&P 500 was up 0.8 percent to 2,734.95 in New York. The Stoxx Europe 600 Index rose 0.3 percent to the highest since January. The MSCI All-Country World Index gained 0.5 percent. The UK’s FTSE 100 Index increased 0.8 percent to the highest on record.
The Bloomberg Dollar Spot Index rose 0.2 percent to the highest in more than five months. The euro declined 0.1 percent to $1.1755, reaching the weakest in about five months. The British pound decreased 0.4 percent to $1.3419, the weakest in almost 21 weeks. South Africa’s rand dipped 0.5 percent to 12.825 per dollar, the weakest in about five months.
The yield on 10-year Treasuries climbed one basis point to 3.07 percent. Britain’s 10-year yield fell one basis point to 1.5 percent, the lowest in a week. France’s 10-year yield declined one basis point to 0.826 percent, the lowest in more than a week. Germany’s 10-year yield dipped three basis points to 0.55 percent.