Stocks Rise on Trade Hopes, Dollar Surges: Markets Wrap

(Bloomberg) -- U.S. stocks rose as renewed signs of easing trade tensions diverted attention from the swirling impeachment drama in Washington. The dollar rallied the most since March.

The S&P 500 halted a three-day slide, with tech and bank shares pacing the gain. Equities rattled by the political turmoil in America turned higher after President Donald Trump suggested a trade deal with China was possible and then moved toward a pact with Japan. The advance recouped most of Tuesday’s drop sparked by the start of a formal impeachment inquiry of Trump.

“Markets are way more interested in a trade deal with China,” Jamie Cox, managing partner for Harris Financial Group in Richmond, VA. “Now that the Congress is deadlocked into impeachment, the president can close a deal with China to boost the global economy into 2020, just in time for ballots to be cast.”

In company news, Philip Morris and Altria both advanced after ending merger talks, while Marathon surged on activist intervention. Nike Inc. rose to a record after strong results. Financials paced gains as Treasury yields turned higher. The dollar rallied versus major peers, rising more than 1% versus the pound and 0.7% versus the yen.

The impeachment push added a fresh element of risk into markets already on edge over trade and signs of slowing global growth, but trade has reliably been the biggest determinant of asset moves, and Trump’s conciliatory comments toward China helped ease some angst over the political upheaval.

“You can’t trade this stuff right now, it’s impossible,” Michael Purves, chief executive officer at Tallbacken Capital Advisors LLC, said on Bloomberg TV Wednesday. "There’s so many different scenarios, you almost have to ignore it and keep investing the way you would.”

In Europe, the mood was more dour. Equities slumped amid rising concern that growth is flagging. U.K. shares fell as parliament reconvened amid Brexit turmoil. Asian benchmarks retreated, with losses of more than 1% in Hong Kong, South Korea, mainland China and India. Crude futures declined after Saudi Aramco said it was ahead of schedule in restoring output.

These are some key events coming up this week:

• Trump will hold a press conference in New York at 4 p.m.
• Thailand decides on monetary policy on Wednesday, followed by the Philippines on Thursday.
• Core PCE -- the Fed’s preferred inflation measure -- is forecast for 1.8%. That’s due Friday.

Here are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.6% as of 4 p.m. New York time.
• The Nasdaq 100 Index added 1.2%.
• The Stoxx Europe 600 Index fell 0.6%.
• Switzerland’s SMI Index dropped 1.2%.
• The MSCI Asia Pacific Index sank 0.7%.

Currencies

• The Bloomberg Dollar Spot Index jumped 0.6%.
• The British pound sank 1.1% to $1.235.
• The euro fell 0.7% to $1.0942.
• The Japanese yen weakened 0.7% to 107.82 per dollar.

Bonds

• The yield on 10-year Treasuries increased eight basis points to 1.73%.
• The yield on two-year Treasuries rose five basis points to 1.68%.
• Britain’s 10-year yield declined two basis points to 0.509%.
• Japan’s 10-year yield fell two basis points to -0.255%.

Commodities

• West Texas Intermediate crude sank 1.3% to $56.53 a barrel.
• The Bloomberg Commodity Index declined 0.8%.
• Gold futures tumbled 1.9% to $1,510.60 an ounce.

--With assistance from Sarah Ponczek, Vildana Hajric, Adam Haigh and Todd White.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editor responsible for this story: Samuel Potter at spotter33@bloomberg.net

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