U.S. Stocks Gain on Trade Hopes; Treasuries Rise: Markets Wrap

(Bloomberg) --

Stocks halted four days of declines as trade optimism reigned ahead of U.S.-China talks at the Group of 20 conference this weekend in Japan. Treasuries advanced.

The S&P 500 headed for its best month since January, rebounding from a rout in May to leave it higher by more than 3% for the quarter. Banks led gains on the day as Chinese and American officials jockeyed before the highly anticipated meeting between Presidents Donald Trump and Xi Jinping on Saturday. Energy producers fell as oil hovered just under $60 a barrel.

The 10-year Treasury yield slipped below 2.02%, with Goldman Sachs Group Inc. cutting its year-end forecast for the rate to 1.75%, matching JPMorgan Chase & Co.’s call from May 31. The yield has plunged from 2.4% at the end of the first quarter. The two-year rate hit 1.74%.

The dollar was little changed, on track for its first monthly decline since January. Gold futures slipped a second day after reaching a six-year high, paring its best monthly rally since 2016 to 7.9%.

The Saturday sit-down between President Donald Trump and Xi in Japan looms as a key event for markets, with reports about a tariff pause contrasting with Trump’s repeated threats of more duties. Even with all of the noise surrounding trade, investors are keeping a close eye on monetary policy and expectations central banks will cut rates to counter signs of a slowing global economy.

“Investors need to be sensitive to this rally, that it’s not driven by corporate fundamentals or better economic data,” Deepak Puri, Americas CIO at Deutsche Bank Wealth Management, said in an interview at Bloomberg’s New York headquarters. “It’s purely driven by two things: one is the Fed and ECB, the global concerted effort to go on an easing cycle. And second, with this near-term resolution on trade, which they might be up for disappointment because we don’t expect the G-20 summit to bring anything materially different than a handshake and a continuation of talks.”

These are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.4% as of 4 p.m. New York time.
• The Nasdaq composite rose 0.7%
• The Dow Jones Industrial Average was little changed.
• The Stoxx Europe 600 Index was little changed.
• The MSCI Emerging Market Index climbed 0.7%.
• The MSCI Asia Pacific Index jumped 1%.

Currencies

• The Bloomberg Dollar Spot Index was steady.
• The euro was little changed at $1.1369.
• The British pound fell 0.2% at $1.2669.
• The Japanese yen was little changed at 107.76 per dollar.

Bonds

• The yield on 10-year Treasuries fell four basis points to 2.01%.
• Germany’s 10-year yield dropped two basis points to -0.32%.
• Britain’s 10-year yield fell one basis point at 0.822%.

Commodities

• West Texas Intermediate crude fell 0.2% at $59.24 a barrel.
• Gold dipped 0.3% to $1,411.30 an ounce.

--With assistance from Laura Curtis and Sarah Ponczek.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

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

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