Stocks Climb as Investors Focus on Trade Talks: Markets Wrap

(Bloomberg) -- Stocks gained and Treasury yields jumped as investors kept a careful eye on the latest trade developments amid high-level meetings between American and Chinese officials. The pound surged on talk of a Brexit deal.

Banks and automakers led the S&P 500 Index higher, though there were plenty of gyrations along the way after an overnight session that saw futures whipsawed by headlines giving conflicting signs of progress on the negotiations. The dollar fell, brushing off a weak inflation reading. Ten-year Treasury yields rose past 1.65% as bonds rallied globally. China’s yuan climbed the most in a month.

Among the latest developments on trade:

• Both China and the U.S. signaled cautious optimism in securing a partial deal for a temporary truce on tariffs
• The discussions extended into the afternoon Thursday
• President Donald Trump said in a Twitter post that he plans to meet with Vice Premier Liu He on Friday, adding “They want to make a deal, but do I?”

Markets have grown jittery against a backdrop of deteriorating economic data and fresh tensions between the U.S. and China in recent days, as they prepare for the first face-to-face talks between senior officials since July. Investor nerves were on full display Thursday as a series of headlines roiled markets, with traders attempting to digest reports on everything from the duration of the talks to the potential currency pact.

“China trade talks are really dominating everything and we’ve seen how unpredictable they can be,” Chris Gaffney, president of world markets at TIAA, said by phone. “We’ve seen it move just back and forth so dramatically. I think everyone’s really going to have to wait until a deal gets actually done.”

Elsewhere on Thursday, the Stoxx Europe 600 Index and the British pound extended gains after U.K. Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar said they could “see a pathway to a possible deal” on Brexit.

Crude rose after OPEC Secretary-General Mohammad Barkindo said members and allies including Russia will do “whatever it takes” to prevent another oil slump as the global economy weakens.

Asian shares ended the session mixed, with Japanese equities recouping their declines by the close, South Korea down and Hong Kong and Shanghai notching modest gains.

Here are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.6% at the close of trading in New York.
• The Stoxx Europe 600 Index rose 0.7%.
• The MSCI Emerging Market Index increased 0.5%.
• The Nikkei-225 Stock Average added 0.5%

Currencies

• The Bloomberg Dollar Spot Index sank 0.4%.
• The euro gained 0.3% to $1.1006.
• The British pound advanced 2% to $1.2447.
• The offshore yuan increased 0.4% to 7.1108 per dollar.
• The Japanese yen weakened 0.4% to 107.95 per dollar.

Bonds

• The yield on 10-year Treasuries rose eight basis points to 1.66%.
• Germany’s 10-year yield rose eight basis points to -0.47%.
• Britain’s 10-year yield jumped 13 basis points to 0.58%.

Commodities

• West Texas Intermediate crude gained 2.1% to $53.69 a barrel.
• Gold fell 0.8% to $1,493.83 an ounce.

--With assistance from Sybilla Gross, Christopher Anstey, Yakob Peterseil and Todd White.

To contact the reporter on this story: Vildana Hajric in New York at vhajric1@bloomberg.net

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

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