Stocks Gain Ahead of U.S.-China Talks; Bonds Rise: Markets Wrap

(Bloomberg) -- Stocks rose for as second day, notching the best month since January on optimism the U.S. and China will make progress during trade talks this weekend. Treasuries edged higher.

The S&P 500 Index pushed its June advance to 6.9% and rose by more than 3.5% in the quarter, rebounding from the rout in May. Materials producers surged 11% in June, buoyed by crude’s best month in five and gold’s biggest rally since the Brexit vote. Chipmakers saw the best monthly gain since 2011 as the sector has shown signs of resilience amid the trade war.

Banks led benchmarks after the Federal Reserve cleared the way for better-than-expected payouts, while Apple Inc. weighed on tech after a report said it was moving some production from the U.S. to China.

Ten-year Treasury yields lingered above 2%, dropping nearly 40 basis points since the end of the last quarter, as fresh evidence that American manufacturing growth is slowing boosted expectations for deep rate cuts this year. The dollar was little changed versus peers, heading for it’s worst month since January.

All eyes now turn to the G-20 gathering in Osaka, where Presidents Donald Trump and Xi Jinping will meet Saturday to seek a breakthrough in the trade war. Trump on Friday said while he hasn’t promised not to issue new tariffs on China he does think “at a minimum” Saturday’s meeting will be “productive.” Meanwhile Xi warned that “bullying practices” won’t work, without mentioning Trump by name.

“Markets just have simple needs right now and they want to see signs of progress,” Nela Richardson, investment strategist at Edward Jones, said in an interview at Bloomberg’s New York headquarters. “If they get something that say, ’look we’re not going to start a new round of tariffs,’ I think that would be good for next week.”

These are the main moves in markets:

Stocks

• The S&P 500 Index advanced 0.6% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index gained 0.7%.
• The MSCI Emerging Market Index was little changed.
• The MSCI Asia Pacific Index declined 0.2%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro was steady at $1.1372.
• The British pound gained 0.2% to $1.2704, the biggest gain in a week.
• The Japanese yen fell less than 0.05% to 107.83 per dollar.

Bonds

• The yield on 10-year Treasuries fell one basis point to 2.00%.
• Germany’s 10-year yield dropped one basis point at -0.327%.
• Britain’s 10-year yield gained one basis point to 0.833%.

Commodities

• Gold advanced 0.1% to $1,413.70 an ounce.
• West Texas Intermediate crude fell 2.3% at $58.06 a barrel.

--With assistance from Justina Lee, Laura Curtis and Vildana Hajric.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

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

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