Stocks, US futures climb on trade-deal optimism

Bloomberg

US equity futures advanced alongside global stocks after the US and China were said to close in on a trade deal that may end American tariffs in return for Chinese concessions. The dollar edged higher with Treasuries, while commodities were mixed.
Gains in media and construction shares led the Stoxx Europe 600 Index to the highest level in five months. Contracts on the S&P 500, Dow and Nasdaq climbed after Chinese and Japanese stocks jumped in Asia. The mooted trade deal was said to require Beijing to follow through on pledges ranging from better protecting intellectual-property rights to buying a significant amount of American products.
The yuan strengthened. The dollar firmed against most major peers even after US President Donald Trump warned against it becoming too strong.
“While we have all these great headlines about what could be achieved under a US-China trade agreement, we’re still a little way away,” said Kerry Craig, JP Morgan’s global market strategist. “There could be a chance for a disappointment. It could be phased in over a number of years. There’s still questions about how and what China will actually buy to try and reduce their deficit.”
Signs of progress between Beijing and Washington are helping revitalise a rally in global equities that showed signs of stalling last week. At the same time, markets stayed focused on the two superpowers for other developments. China was said to plan a 3 percentage-point cut to its VAT tax rate for manufacturing to support its slowing economy, which Morgan Stanley estimated could add 0.6 percent to growth.
The annual National People’s Congress may yield policy clues when it kicks off on Tuesday and investors will get the latest read on the US economy with the monthly jobs report on Friday.
Elsewhere, the pound rose against the euro, approaching a 21-month high it touched last week, amid optimism UK lawmakers are avoiding a hard Brexit by moving towards
supporting Prime Minister Theresa May’s proposed deal. West Texas oil climbed above $56 a barrel on signs of slowing US production growth and as Opec and its allies deepened cutbacks, while gold and copper fell.
China Stocks Climb to Eight-Month High
Chinese stocks rose to their highest level since June as signs of progress in trade talks and the breaking of a key resistance level added to confidence. Shares pared gains in afternoon trading as investors took profit.
The Shanghai Composite Index climbed 1.1% at the close, paring a gain of as much as 3.2% after smashing through the 3,000 level that had capped gains all last week. About seven stocks rose for each that fell on the gauge. The index has now climbed 23% since its Jan. 3 low, helping add some $1.5 trillion in value to China’s stock market.
Momentum in China’s stock market hasn’t been this strong since the peak of the bubble in 2015. The Shanghai Composite’s relative-strength index is nearing the highest levels seen that year. Almost all of its 1500-odd members are above their long-term moving averages, showing the rally is also the broadest since 2015. Turnover has surged after falling to near a four-year low in December.
The yuan extended its lead over Asian peers this year, strengthening 0.17% to 6.6962 per dollar. The currency jumped 2.7% in 2019, the most in the region, after slumping more than 5 percent last year. Bonds were little changed, with the yield on 10-year debt falling less than 1 basis point to 3.2%.
The small-cap ChiNext Index jumped 3.3%, taking its year-to-date surge to 30%. Financials were among the biggest contributors to the Shanghai gauge, while agriculture stocks led gains in Shenzhen.