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Optimism over U.S.-China trade deal lifts equity markets

Reuters  |  NEW YORK 

By David Randall

NEW YORK (Reuters) - Hopes for a resolution in a prolonged trade spat between the and helped extend a week-long rally in world stock markets on Wednesday, and bond yields also climbed.

European shares rose 0.6 percent following broad gains in MSCI's gauge of stocks across the globe gained 0.44 percent.

Bond yields climbed as investors sold safe-haven government bonds in favour of riskier assets like equities. Benchmark 10-year notes last fell 7/32 in price to yield 2.7075 percent, from 2.684 percent late on Tuesday.

U.S. said on Tuesday he could let a March 1 deadline for a trade deal with "slide" if the two sides were not close on agreement. But he added he was "not inclined" to delay raising tariffs.

"There's still a level of uncertainty there but at least the rhetoric does not show he is digging his heels in, so the market has quite rightly taken it as a positive," said Justin Onuekwusi, fund Management.

On Wall Street, the rose 117.51 points, or 0.46 percent, to 25,543.27, the S&P 500 gained 8.3 points, or 0.30 percent, to 2,753.03 and the Nasdaq Composite added 5.76 points, or 0.08 percent, to 7,420.38.

The rise in U.S. benchmark Treasury yields came after data showed core consumer prices rose in January. The core Consumer Price Index, excluding and energy components, gained 0.2 percent, rising by the same margin for a fifth month.

"The Fed's new reaction function is they need to see inflationary pressures before they hike again, and clearly we've seen those inflationary pressures aren't there," said Mohammed Kazmi, at in

China's blue-chip CSI 300 rose around 2 percent to a four-month high, with tech shares leading gains.

Progress on another issue unnerving markets - a deal to fund the and avoid another possible government shutdown - also provided a boost to risk appetite.

The Cboe Volatility Index, Wall Street's so-called "fear gauge," dropped overnight to 14.95, its lowest since October.

Emerging market stocks faltered, trading flat on the day. Lynch said on Tuesday investors saw emerging markets as the "most crowded" trade for the first time ever.

In commodities, surged nearly 2 percent after OPEC said it slashed production in January and as U.S. sanctions hit Venezuela's

(Reporting by David Randall; Editing by Bernadette Baum, and Sonya Hepinstall)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, February 14 2019. 03:16 IST