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World share markets rally on revived trade hopes; dollar gains

NEW YORK (Reuters) - The dollar rose and global equity markets rallied on Monday, with the Nasdaq and S&P 500 hitting new highs as investors grew more hopeful the United States and China could soon sign an interim deal to end their trade war.

FILE PHOTO: The Nasdaq logo is displayed at the Nasdaq Market site in New York, U.S., May 2, 2019. REUTERS/Brendan McDermid

Trade-sensitive miners in Europe .SXPP and semiconductors on Wall Street .SOX climbing on reports suggesting the world's two largest economies were close to an initial trade deal. A burst of M&A activity also lifted equities.

European shares posted their biggest daily gain in three weeks as France's LVMH LVMH.PA agreed to buy luxury jeweller Tiffany & Co TIF.N for $16.2 billion, and Swiss drugmaker Novartis NOVN.S agreed to a $9.7 billion acquisition of The Medicines Co MDCO.O.

In the United States, Charles Schwab Corp SCHW.N agreed to buy TD Ameritrade Holding Corp AMTD.O in an all-stock deal valued at $26 billion while EBay Inc EBAY.O will sell ticketing unit StubHub to ticket reseller Viagogo Ltd for $4.05 billion in cash.

Reports that an elusive “phase one” U.S.-Sino trade agreement was near drove broad buying in stock markets.

“The market’s really assuming that we get an initial deal,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “There’s a lot of optimism, excessive optimism, but there is still some upside assuming that it does occur.”

Corporations have put a hold on capital expenditures on property, plant and equipment as trade uncertainty has dragged on the industrial side of the U.S. economy, Ghriskey said.

“I don’t see the market selling off when eventually we get a deal, but there’s limited upside at that point,” he said.

U.S. national security adviser Robert O’Brien said on Saturday that a trade pact was still possible by year’s end, while Chinese state-backed tabloid Global Times said Beijing and Washington were “very close” to a “phase one” trade deal.

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Adding to the positive mood was the weekend announcement that China would seek to improve protections for intellectual property rights, a sticking point in the talks.

MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.70% and its emerging markets index .MSCIEF added 0.47%. The pan-European STOXX 600 index .STOXX rose 1.0%.

Apple Inc AAPL.O, Microsoft Corp MSFT.O and AMZN.O, along with microchip stocks, lifted U.S. stocks.

The Philadelphia Semiconductor index .SOX jumped 2.43% and was on pace for its best day in just over three weeks.

The Dow Jones Industrial Average .DJI rose 190.85 points, or 0.68%, to 28,066.47. The S&P 500 .SPX gained 23.35 points, or 0.75%, to 3,133.64 and the Nasdaq Composite .IXIC added 112.60 points, or 1.32%, to 8,632.49.

The benchmark S&P 500 has gained 25% so far this year, while the Nasdaq is up 30%.

Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS bounced 0.7% and Japan's Nikkei .N225 firmed 0.7%.

Gold fell for a fourth straight session, sliding to a two-week low, as investors’ appetite for riskier assets increased. Oil prices edged higher.

U.S. gold futures GCcv1 settled down 0.5% at $1,456.90 an ounce. Brent crude futures LCOc1 gained 26 cents to settle at $63.63 a barrel and West Texas Intermediate (WTI) crude CLc1 rose 24 cents to settle at $58.01 a barrel.

Core euro zone bond yields rose slightly, as positive trade developments trumped last week’s weak euro zone data.

The German benchmark 10-year bond yield rose two basis points in early London trading DE10YT=RR before easing to trade almost flat on the day at -0.349%.

U.S. Treasury yields slid ahead of the Treasury Department’s scheduled sale of $113 billion in coupon-bearing supply this week and on optimism about trade.

Benchmark 10-year notes US10YT=RR rose 4/32 in price to push their yield down to 1.7586%.

The dollar index .DXY rose 0.05%, with the euro EUR= down 0.11% to $1.1009. The Japanese yen JPY= weakened 0.29% versus the greenback at 108.96 per dollar.

Graphic - Global assets in 2019: here

Graphic - World FX rates in 2019: here

Graphic - MSCI All Country World Index Market Cap: here

Reporting by Ritvik Carvalho; additional reporting by Sagarika Jaisinghani and Lisa Pauline Mattackal in Bangalore and Wayne Cole in Sydney; Editing by Dan Grebler, Nick Zieminski and David Gregorio