-
Stocks rally as China’s Xi backs globalization in key speech
-
Safe-haven assets including Treasuries and yen retreat
Risk appetite returned to markets on Tuesday after China’s President Xi Jinping struck aconciliatory tone on trade during a major address. Stocks in Asia and Europe rallied and U.S. equity index futures jumped, while some safe-haven assets retreated.
The Stoxx Europe 600 Index followed shares from Sydney to Hong Kong higher alongside oil and metals. Xi said Cold War and zero-sum mentalities were “out of place,” and backed free trade and dialogue to resolve disputes. Treasuries extended declines with the yen, while gold pared a drop to trade little changed. European government bonds were broadly stable.
With Xi’s comments seemingly pointing to a less-combative approach from China and U.S. President Donald Trump also striking a more conciliatory tone, traders are weighing whether recent fears of a trade war were overblown. That’s reinvigorating faith in the synchronized global-growth story, even after a Federal Reserve official cautioned that the spat between the world’s two-biggest economies won’t be resolved soon.
“Xi’s speech sends a positive signal to the market since he backs globalization and the opening up of China’s market,” said Linus Yip, a strategist at First Shanghai Securities. “Investors were very worried about trade disputes, while his speech calms the nerves a lot. The concern about trade disputes in the near-term are still here however, since what Xi pictures is a very long-term picture.”
Meanwhile, political worries simmered in the background. Despite gains in technology stocks driving U.S. equities higher on Monday, the S&P 500 Index 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 U.S. sanctions. The ruble extended its decline, dropping to the weakest level since December 2016, and equities fluctuated before rising.
Terminal users can read our markets live blog here.
Here’s what is coming up this week:
- Facebook Inc. Chief Executive Officer Mark Zuckerberg testifies at two Congressional hearings Tuesday and Wednesday.
- U.S. CPI data and FOMC minutes due Wednesday.
- JPMorgan Chase & Co. and Citigroup Inc. report first-quarter earnings Friday.
These are the main moves in markets:
Stocks
- The Stoxx Europe 600 Index advanced 0.6 percent as of 10:36 a.m. London time, the highest in more than three weeks.
- Futures on the S&P 500 Index increased 1.1 percent.
- The MSCI All-Country World Index climbed 0.3 percent.
- The U.K.’s FTSE 100 Index increased 0.4 percent to the highest in more than a month.
- Germany’s DAX Index jumped 1.1 percent to the highest in more than four weeks.
- The MSCI Emerging Market Index gained 0.5 percent to the highest in a week.
- The MSCI Asia Pacific Index advanced 0.7 percent to the highest in two weeks on the largest gain in two weeks.
Currencies
- The Bloomberg Dollar Spot Index dipped 0.1 percent to the lowest in two weeks.
- The euro climbed less than 0.05 percent to $1.2323, the strongest in more than a week.
- The British pound advanced 0.3 percent to $1.4172, the strongest in more than two weeks.
- The Japanese yen declined 0.2 percent to 107.00 per dollar.
Bonds
- The yield on 10-year Treasuries advanced two basis points to 2.80 percent.
- Germany’s 10-year yield was unchanged at 0.50 percent.
- Britain’s 10-year yield increased one basis point to 1.407 percent, the highest in two weeks.
Commodities
- West Texas Intermediate crude gained 1.2 percent to $64.21 a barrel, the highest in more than a week.
- Copper increased 0.7 percent to $3.10 a pound, the highest in more than three weeks.
- Gold decreased less than 0.05 percent to $1,335.95 an ounce.
April 10, 2018, 7:40 PM GMT+10
— With assistance by Jeanny Yu, Eric Lam, Adam Haigh, and Andreea Papuc
Source: Bloomberg