U.S. Stocks Advance on Trade Outlook; Pound Climbs: Markets Wrap

(Bloomberg) -- U.S. stocks advanced as the outlook for trade took a positive turn and the British prime minister defeated a challenge to her leadership.

The S&P 500 rose 0.5 percent after an afternoon slump that pared its gain by more than half. It marked the fourth straight day that investors sold an early rally, a trend that’s a stark reversal from months where traders bought any meaningful dip. Oil’s retreat coincided with the move, amid reports that deep discord exists among OPEC members ahead of planned output cuts.

“We’re in a stock market correction. All rallies are suspect,” said Michael Antonelli, the managing director at Robert W. Baird & Co.

The early gains came as signs emerged that trade tensions would ease, first after the arrested Huawei executive was granted bail and then when President Donald Trump suggested he could use his influence to calm that situation as part of a deal with China. For its part, China hinted that it would ease access to local markets. The Asian country is also making its first sizable purchase of U.S. soybeans since the countries imposed tariffs.

The British pound surged the most in a month on speculation Theresa May will survive the vote of confidence and mostly held onto the gains after her victory was confirmed. Treasuries and the dollar both slipped as data showed a key measure of U.S. inflation picked up as expected in November.

While developments on trade tends and Brexit have been at the forefront for investors, they’re also keeping watch on the risk of a shutdown of parts of the U.S. government. Trump is at odds with Democratic leaders in Congress over funding for a border wall with Mexico.

Elsewhere, India’s bonds rallied after an ally of Prime Minister Narendra Modi was named as the new central bank chief.

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Here are some key events on the calendar this week:

• The European Central Bank is set to end asset purchases at its final policy meeting of 2018 on Thursday.
• China industrial production, retail sales data for November is due Friday.

And these are the main moves in markets:

Stocks

• The S&P 500 Index advanced 0.5 percent at the close of trading in New York.
• The Stoxx Europe 600 Index jumped 1.7 percent to the highest in a week.
• The Nikkei-225 Stock Average added 2.2 percent.
• The MSCI Emerging Market Index advanced 1.6 percent.

Currencies

• The Bloomberg Dollar Spot Index decreased 0.4 percent.
• The euro increased 0.5 percent to $1.1373.
• The British pound jumped 1 percent to $1.2615.
• The Japanese yen gained 0.1 percent to 113.24 per dollar.

Bonds

• The yield on 10-year Treasuries climbed three basis points to 2.91 percent.
• Germany’s 10-year yield climbed five basis points to 0.28 percent.
• Britain’s 10-year yield jumped nine basis points to 1.28 percent.

Commodities

• West Texas Intermediate crude fell 1 percent to $51.14 a barrel.
• Gold advanced 0.2 percent to $1,245.86 an ounce.

--With assistance from Andreea Papuc, Adam Haigh, Christopher Anstey, Samuel Potter and Robert Brand.

To contact the reporters on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net;Luke Kawa in New York at lkawa@bloomberg.net

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

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