New Zealand Markets closed

U.S. Stocks Break Out of Malaise Amid Trade Hopes: Markets Wrap

Sarah Ponczek and Reade Pickert
U.S. Stocks Break Out of Malaise Amid Trade Hopes: Markets Wrap

(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.

U.S. stocks shook off their malaise Tuesday, boosted by optimism over trade talks and a tentative deal among American lawmakers to avert a government shutdown. Treasuries and the dollar edged lower.

After four sessions of losses or whisker-thin gains, the S&P 500 Index registered its biggest one-day increase this month, breaking through its 200-day moving average. The rally was broad-based: Materials stocks led the charge, but financials and the FAANG cohort of tech stocks also advanced, and energy companies gained as oil rebounded from a two-week low after Saudi Arabia pledged to deepen production cuts. The Dow Jones Industrial Average hit a 10-week high.

U.S. lawmakers said they have reached an “agreement in principle” on border security funding that would forestall a second shutdown. President Donald Trump said he’ll hold a meeting Tuesday to discuss the proposal. He said the preliminary agreement is “not doing the trick” but also said he has to study it and can add to it. On trade, the U.S. president said that he’s open to letting slide a March 1 deadline for China tariffs if a deal appears close.

“None of the worries that people had in the fourth quarter have really gone away,” said John Carey, managing director and portfolio manager at Amundi Pioneer Asset Management. “But people are maybe a little less concerned now and a little bit more positive about the ability of the economy to continue in a growth trajectory over the next couple of years, and that should be good for earnings.”

The prospect of a deal to keep the U.S. government open together with hints that Trump may reach an accord with China appear to be rekindling the rally in riskier assets after a turbo-charged start to the year showed signs of ebbing last week. A dovish shift by the world’s central banks has also helped, but at the same time has underscored the dilemma facing investors -- join the chase for late-cycle gains, or gird for a looming slowdown in growth.

Elsewhere, carmakers led the advance in the Stoxx Europe 600 Index, while West Texas intermediate crude futures and gold advanced. Emerging-market shares climbed and their currencies edged higher. The pound gained as U.K. Prime Minister Theresa May updated lawmakers on the progress of Brexit talks with the EU. The offshore yuan strengthened for the first time in five days.

Here are some key events coming up:

Chinese Vice Premier Liu He was expected to join U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in high-level trade talks Thursday and Friday.Earnings season continues with reports from companies including Cisco, Vivendi, Nvidia, Nestle, Coca-Cola and Credit Suisse.Sweden’s Riksbank is expected to keep interest rates at minus 0.25 percent on Wednesday after the first increase in more than seven years in December.Data Wednesday is expected to show U.S. consumer prices rose 0.1 percent in January, after falling 0.1 percent in December.

These are the main moves in markets:

Stocks

The S&P 500 Index climbed 1.3 percent, to a 10-week high, as of 4:01 p.m. New York time.The Dow Jones Industrial Average rose 1.5 percent; the Nasdaq 100 gained 1.5 percent.The Stoxx Europe 600 Index increased 0.5 percent.The MSCI Emerging Market Index climbed 0.8 percent, the first advance in a week and the biggest increase in more than a week.

Currencies

The Bloomberg Dollar Spot Index dipped 0.3 percent, the first retreat in almost two weeks.The euro climbed 0.5 percent to $1.1331.The British pound jumped 0.3 percent to $1.2896, the biggest increase in almost two weeks.The Japanese yen fell 0.1 percent to 110.47 per dollar.

Bonds

The yield on 10-year Treasuries advanced two basis points to 2.68 percent, the biggest gain in over a week.Germany’s 10-year yield increased one basis point to 0.13 percent.Britain’s 10-year yield increased one basis point to 1.185 percent.

Commodities

The Bloomberg Commodity Index jumped 0.6 percent, its biggest increase in two weeks.West Texas intermediate crude increased 1.3 percent to $53.10 a barrel.Gold jumped 0.2 percent to $1,311.27 an ounce.

--With assistance from Todd White, Andreea Papuc, Eddie van der Walt and Luke Kawa.

To contact the reporters on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net;Reade Pickert in New York at epickert@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.