November 12, 2019 / 10:03 AM / a month ago

Global stocks climb as investors hope Trump delivers on trade

NEW YORK (Reuters) - Equity markets and government bond yields rose on Tuesday as investors awaited a speech by U.S. President Donald Trump on U.S. trade policy, in which he is expected to discuss talks with China and a tariff decision on European automakers.

FILE PHOTO: Traders from BGC Partners, a global brokerage company in London's Canary Wharf financial centre wait for European stock markets to open early June 24, 2016. REUTERS/Russell Boyce

Hopes for the speech were two-fold. First, that there would be reassurances the China talks were progressing and second, that there would be a nod to overnight reports that a decision on European car tariffs would be delayed another six months.

Rising technology shares helped Wall Street hit fresh record highs while European shares edged back toward four-year highs. MSCI’s gauge of worldwide equity performance climbed to almost 1% shy of a record peak set in January 2018.

A steepening bond market yield curves also signaled increasing confidence that a recession would be avoided.

Trade-sensitive chipmakers helped pushed Europe’s STOXX 600 up 0.53% as the Philadelphia semiconductor index rose 0.89%.

Overnight in Asia, MSCI’s broadest measure of Asia-Pacific shares outside Japan climbed 0.5% while Japan’s Nikkei ended 0.8% higher.

While Trump’s speech could deliver the unexpected, any downside is likely to be limited, said Candice Bangsund, a global asset allocation strategist at Fiera Capital in Montreal.

If we do see some near-term weakness, that’s a good opportunity to get back into the market,” Bangsund said.

“Longer-term we’re confident that equities are going to not only post positive results but also outperform fixed income in the coming year.”

Remarks by Trump over the weekend, that there had been incorrect reporting about U.S. willingness to lift tariffs on China, sent markets lower on Monday.

Investors were also anxious about Hong Kong after a violent escalation of protests knocked 3% off the key Hang Seng index and nearly 2% off Asia-exposed banks HSBC and StanChart in recent days.

Hong Kong’s embattled leader Carrie Lam on Tuesday said protesters who were trying to “paralyze” the city were extremely selfish and hoped all universities and schools would urge students not to participate in violence.

Bond markets were also stirring again.

A partial holiday in the United States had closed the Treasury market on Monday but there was an early milestone on Tuesday as the gap between short-term 3-month and longer-term 10-year yields hit the widest level of the year so far.

That widening, or steepening of the ‘curve’ as it is also known, adds to signs that the fears that took hold earlier in the year that the country was heading into recession, were receding again.

“Recession fears are misplaced. We are not ripe for an extended bear market,” Bangsund said.

Treasury yields on 10-year notes were 1.9417%, having slipped from last week’s three-month top of 1.97%. European yields were also a touch higher.

In currency markets, the dollar was moving higher against most currencies ahead of Trump’s trade speech.

A man is reflected on an electronic board showing a graph analyzing recent change of Nikkei stock index outside a brokerage in Tokyo, Japan, January 7, 2019. REUTERS/Kim Kyung-Hoon/File Photo

The dollar index rose 0.15%, with the euro down 0.18% to $1.1012. The Japanese yen weakened 0.08% versus the greenback at 109.16 per dollar.

Gold, meanwhile, looked to be heading for a third day of declines, touching its lowest since early August at $1,447.89 per ounce at one point before steadying around $1,451.

U.S. crude gained 31 cents to $57.17 a barrel, while Brent crude futures added 25 cents to $62.43.

Reporting by Herbert Lash; Editing by Bernadette Baum

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