Stocks Soar as Trade War Dies Down Before Earnings: Markets Wrap

(Bloomberg) -- U.S. stocks rallied with Asian equities as combatants took a break from battle posturing in the trade war and bulls looked to the start of first-quarter earnings season for reassurance. Treasuries fell with the dollar.

The S&P 500 Index rose more than 1.5 percent after tumbling 1.4 last week, as all but one of the major industry groups in the gauge were higher. Meanwhile, strength in semiconductors, software and technology hardware pushed the Nasdaq 100 Index and Nasdaq Composite Index up more than 2 percent.

“Despite recent concerns, trends for (tech) remain intact, and the sector remains a standout on both top- and bottom-line growth,” equity strategists at Credit Suisse Group AG led by Jonathan Golub wrote in a note to clients Monday.

Hong Kong’s Hang Seng Index also added more than 1 percent, and the Shanghai Stock Exchange Composite Index advanced. The yuan pared its gains as China’s leaders were said to evaluate the impact of gradually depreciating the currency. Commodities rebounded after their worst weekly drop since mid-March, with oil and industrial metals rallying.

Traders are anticipating a statesman-like performance from President Xi Jinping in a speech Tuesday at the Boao Forum for Asia. While senior officials are examining options in case matters get worse, he was expected to deliver a strong warning about the consequences of an escalation to a full trade war. Currency moves, including a recovery in emerging markets and weaker gold prices, bore out the returning sense of calm.

“What the market will now want to hopefully see is some form of negotiation starting between the Chinese and the Americans,” James Barty, Bank of America Corp.’s head of global cross-asset and European equity strategy, said on Bloomberg TV. “It’s not in anybody’s interest to go down to a full-blown trade war.”

Meanwhile, in Russia the currency plunged and the Moex Russia Index of stocks tumbled the most in four years after the U.S. sanctioned some prominent Kremlin-connected billionaires and their companies. Bitcoin dropped below $7,000.

European stocks pared their gains, after earlier hitting a three-week high, while a measure of global shares advanced. Safe-haven assets showed little reaction to a missile attack on a Syrian airbase that Russia blamed on Israel.

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Here’s what is coming up this week:

• Bank of Japan Governor Haruhiko Kuroda speaks at the start of his second term.
• China’s Xi gives a keynote address at Boao Forum Tuesday.
• 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 S&P 500 was up 1.6 percent to 2,647.08 as of 12:51 p.m. in New York.
• The Stoxx Europe 600 Index rose 0.1 percent.
• The MSCI All-Country World Index climbed 1.1 percent.
• Hong Kong’s Hang Seng Index gained 1.3 percent, the largest rise in a month.
• Germany’s DAX Index added 0.2 percent.

Currencies

• The Bloomberg dollar spot index fell 0.2 percent
• The euro gained 0.4 percent to $1.2324.
• The Japanese yen was little changed at 106.94 per dollar.
• The British pound rose 0.4 percent to $1.4143.
• The Russian ruble declined 3.8 percent to 60.3083 per dollar, the biggest decrease since September 2015.

Bonds

• The yield on 10-year Treasuries added three basis points to 2.7954 percent.
• Britain’s 10-year yield increased one basis point to 1.407 percent.
• Germany’s 10-year yield climbed one basis point to 0.504 percent.

Commodities

• West Texas Intermediate crude gained 2.1 percent to $63.34 a barrel, the biggest advance in more than two weeks.
• Gold rose less than 0.3 percent to $1,336.43 an ounce.
• LME aluminum surged 6.6 percent, its biggest bounce since January 1992.
• The Bloomberg Commodity Index increased 1 percent, its largest gain in almost two months.

--With assistance from Eddie van der Walt Joanna Ossinger and Luke Kawa

To contact the reporter on this story: Eric J. Weiner in New York at eweiner12@bloomberg.net.

To contact the editor responsible for this story: Jeremy Herron at jherron8@bloomberg.net.

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