Stocks rally as trade tiff eases; Treasuries slip with dollar

Bloomberg

Stocks surged on Tuesday following conciliatory remarks from Chinese President Xi Jinping aimed at releasing some pressure from a trade dispute between the world’s biggest economies. Treasuries fell with the dollar.
All major US equity indexes were up more than 1.4 percent after Xi said Cold War and zero-sum mentalities were “out of place,” and backed free trade and dialogue to resolve disputes. Equities added to gains after White House trade adviser Peter Navarro said the doors are open for trade talks between the world’s two largest economies. The Stoxx Europe 600 Index followed shares from Sydney to Hong Kong higher.
“President Xi tried to defuse trade tension by promising more market access to foreign investors,” UniCredit SpA analysts including Chiara Silvestre wrote in a note. “Today, the macro calendar is rather light, so the global risk mood will be the major driver.”
With Xi’s comments and US President Donald Trump’s more friendly tone pointing to a potentially less combative approach to the nations’ disagreements, investors are weighing whether fears of a trade war have become overblown. That’s reinvigorating faith in the synchronised global-growth story ahead of earnings season, even after a Federal Reserve official cautioned that the spat won’t be resolved soon.
Elsewhere, oil and metals climbed. Treasuries extended declines with the yen, and gold pared a drop to trade little changed after the US government reported that wholesale prices rose more than expected in March. European government bonds edged lower and the single currency rose after somewhat hawkish remarks by a European Central Bank official.
Meanwhile, political worries simmered in the background. Despite gains in technology stocks driving US equities higher on Monday, the S&P 500 erased about two-thirds of its advance following news the FBI conducted a raid at the office of Trump’s longtime lawyer.
And Russian assets remain in focus in the wake of a fresh round of US sanctions. The ruble extended its decline, dropping to the weakest level since December 2016, and equities fluctuated before rising. Facebook Inc.
Chief Executive Officer Mark Zuckerberg testifies at two Congressional hearings on Tuesday and Wednesday.
The S&P 500 was up 1.7 percent to 2,658.08 in New York. The Nasdaq 100 Index jumped 1.9 percent and the Dow Jones Industrial Average added 2 percent. The Stoxx Europe 600 climbed 0.5 percent to the highest in a month. The MSCI All-Country World Index increased 1 percent. The MSCI Emerging Market Index gained 0.9 percent. The MSCI Asia Pacific Index advanced 0.9 percent.
The Bloomberg Dollar Spot Index fell 0.3 percent to the lowest in two weeks. The Japanese yen decreased 0.2 percent to 106.98 per dollar. The euro gained 0.4 percent to $1.2366. The British pound increased 0.3 percent to $1.4179, the strongest in two weeks.