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Global Markets: Trade talk hopes and shutdown deal buoy stocks

Reuters  |  LONDON 

By Marc Jones

(Reuters) - World shares and bond yields rode a renewed surge in risk appetite on Tuesday, as investors were optimistic about U.S.-China trade talks and cheered Washington's deal to avoid another government shutdown.

Tokyo's Nikkei set the tone with its best day of the year so far [.T] and wasted little time in trying to lift the STOXX 600 back to the two-month high it set last week. [.EU]

Germany's DAX jumped more than 1.2 percent, after rising 1 percent on Monday, and and were up 0.8 percent, while London's FTSE approached a four-month peak despite ongoing Brexit uncertainty.

The dollar hovered at a two-month high and the Australian dollar also gained. The yen and Swiss franc dipped while and German bund yields edged up as investors jettisoned safe havens.

"We have had two bits of relatively good overnight - optimism about the U.S. shutdown not resuming and optimism about a trade deal," said

"Equities are higher, bond yields are a little bit higher, yen and Swiss franc weakest overnight of the major currencies so it's sort of risk-on rules OK!"

Juckes said he reckoned there was now a 75 percent chance that a ratcheting up of U.S. tariffs on Chinese goods at the start of March will be avoided and a 95 percent chance that another shutdown will be dodged.

Those odds got a boost on Monday after U.S. lawmakers reached a tentative deal on border security funding, though aides cautioned that it did not contain the $5.7 billion wants to build a wall on the Mexican border.

S&P 500 futures were up nearly 0.5 percent, pointing to a solid start on Wall Street later after a choppy day on Monday.

U.S. and Chinese officials expressed hopes the new round of talks, which began in on Monday, would bring them closer to easing their months-long trade war.

and are trying to hammer out a deal before a March 1 deadline, without which U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent.

"There will be no winner in a trade war. So at some point they will likely strike a deal," said Mutsumi Kagawa, at in


MSCI's broadest index of shares outside edged up 0.3 percent.

rose 0.35 percent, South Korea's climbed 0.6 percent and Australian shares gained 0.3 percent.

The Nikkei rallied though, shooting up 2.6 percent after closing on Friday at its lowest level since early January. The market was closed on Monday.

With the yen backtracking again, shares of exporters such as automakers and led the charge. Separately, noted it was 20 years since cut interest rates to zero, something now standard in large parts of [.T]

The dollar held firm, having gained for eight straight sessions against a basket of six major currencies until Monday, its longest rally in two years.

Although the Federal Reserve's dovish turn dented the dollar earlier this month, some analysts noted the U.S. still has the highest yield among major peers and that the Fed continues to shrink its balance sheet.

"The dollar is the market's pet at present regardless of whether concerns about the global are on the rise," strategists at said in a note.

The dollar popped up to a six-week high of 110.65 yen. In contrast, the euro dropped to as low as $1.1267, its weakest in 2-1/2 months, and last traded at $1.1277.

In commodity markets, also ticked up as traders weighed support from OPEC-led supply restraint and a slowdown in the global

U.S. crude futures traded at $52.68 per barrel, up 0.5 percent. Brent crude rose 0.6 percent to $61.89 per barrel. Gold was a touch stronger at $1,312 an ounce.

(Additional reporting by in and in London; Editing by Susan Fenton)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, February 12 2019. 15:45 IST