A man sits in front of sales listings displayed at a Hong Kong Property Services Agency Ltd. real estate agency in Hong Kong, China, (Photographer: Paul Yeung/Bloomberg)

S&P, Dow Soar to Record Highs as Trade Fears Abate: Markets Wrap

(Bloomberg) -- U.S. stock benchmarks reached new highs Thursday on news from China about tariff and currency moves that could ease trade tensions. Treasury yields remained near their highest level this year. The dollar slid.

The S&P 500 Index soared to a record close -- led by the technology, health-care and financial sectors -- lodging its biggest gain in over a month. The Dow Jones Industrial Average also reached a new pinnacle, with 28 of 30 constituents flashing green. Most European and Asian shares also gained.

Trade conflicts that had stocks gyrating early in the week have since cooled off. China is said to be planning to cut the average tariff rate it charges on imports from the majority of its trading partners as soon as next month. On Wednesday, Premier Li Keqiang his government wouldn’t devalue the currency in order to boost its exports amid the trade war.

S&P, Dow Soar to Record Highs as Trade Fears Abate: Markets Wrap

The yield on 10-year Treasuries held above 3 percent, near its high for the year. The greenback weakened after a report said the U.S. and Canada are unlikely to reach a deal on Nafta in Washington this week; jobless data was solid but did little to change the mood. The pound surged after August retail sales came in higher than expected.

“The dollar has generally strengthened on tariff fears, especially against EM currencies,” Pravit Chintawongvanich, an equity derivatives strategist at Wells Fargo Securities, said by phone. “What you’re seeing today is the opposite of that. EM equities and DM equities ex-U.S. are catching up. Today is a continuation of the risk-on theme we’ve seen in the last couple days.”

Equity markets have so far remained resilient in the face of rising bond yields, suggesting investors are comfortable with the outlook for corporate earnings and global growth even as borrowing costs rise along with trade tensions. Ahead of the Fed meeting next week some other central banks topped the agenda on Thursday, with Norway’s policy makers raising interest rates for the first time in seven years as the SNB kept deposit rates unchanged.

Elsewhere, emerging-market assets continued to rally off the lows seen earlier this month, with the rand among the leading developing-world currencies as the South African Reserve Bank held its key interest rate at a two-year low. Norway’s krone retreated as investors saw the central bank’s rate trajectory as dovish, while the Swiss franc strengthened.

West Texas crude dropped after U.S. President Donald Trump resumed his criticism of OPEC on Twitter.

Terminal users can read our Markets Live blog.

Here are some key events coming up this week:

  • The Organization of Petroleum Exporting Countries and its allies meet in Algiers this weekend.

These are the main moves in markets:

Stocks

  • The S&P 500 Index gained 0.8 percent as of 4 p.m. New York time to its highest on record.
  • The Dow Jones Industrial Average rose 1 percent, also reaching a record high.
  • The Stoxx Europe 600 Index jumped 0.7 percent.
  • The U.K.’s FTSE 100 Index climbed 0.5 percent.
  • The MSCI Emerging Market Index jumped 0.9 percent to the highest in more than two weeks.

Currencies

  • The Bloomberg Dollar Spot Index decreased 0.4 percent to the lowest in eight weeks.
  • The euro climbed 0.9 percent to $1.1779.
  • The British pound rose 1 percent to $1.3271.
  • The Japanese yen sank 0.1 percent to 112.41 per dollar.

Bonds

  • The yield on 10-year Treasuries rose less than one basis point to 3.07 percent, the highest in more than four months.
  • Germany’s 10-year yield decreased two basis points to 0.47 percent.
  • Britain’s 10-year yield fell two basis points to 1.585 percent.

Commodities

  • The Bloomberg Commodity Index rose 0.6 percent, approaching a six-week high.
  • West Texas Intermediate crude fell 0.4 percent to $70.80 a barrel.
  • LME copper fell 0.6 percent to $6,082.00 a metric ton.
  • Gold rose 0.3 percent to $1,207.28 an ounce.

©2018 Bloomberg L.P.