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Trade talk optimism boosts stocks; rate outlook hits dollar

Reuters  |  NEW YORK 

By Saqib Iqbal Ahmed

NEW YORK (Reuters) - An index of world stocks rose on Monday, adding to Friday's strong gains, on optimism about the outcome of trade talks between and

Growing bets the Federal Reserve will halt its multi-year rate-hike cycle sent the dollar lower across the board, while rising equity markets and support from OPEC production cuts helped lift

MSCI's world equity index <.MIWD00000PUS>, which tracks shares in 47 countries, was up 1.05 percent, its highest level since Dec. 19.

On Wall Street, the resumption of U.S.-trade talks helped eased concerns about the fallout from an extended trade war between the world's two largest economies. Technology and consumer discretionary shares led gains.

U.S. officials are meeting their counterparts in this week for the first face-to-face talks since U.S. and Chinese agreed in December to a 90-day truce in a trade war that has roiled global markets.

U.S. predicted on Monday that and could reach a trade deal that "we can live with."

"The main thing is the administration's implied progress on talks with That's something that the market sees as very important," said Rick Meckler, partner at in New Vernon,

The Dow Jones Industrial Average <.DJI> rose 165.54 points, or 0.71 percent, to 23,598.7, the S&P 500 <.SPX> gained 25.38 points, or 1.00 percent, to 2,557.32, and the Nasdaq Composite <.IXIC> added 94.63 points, or 1.4 percent, to 6,833.48.

The gains extended Friday's rise following robust U.S. employment data and a message from the Federal Reserve that it would be patient and flexible in policy decisions this year.

On Friday, told the that is not on a preset path of interest rate hikes and that it will be sensitive to the downside risks markets are in.

European shares edged lower on Monday amid lingering worries about the euro zone and Brexit. The pan-European STOXX 600 <.STOXX> finished down 0.15 percent.

In currency markets, the dollar index <.DXY>, which tracks the greenback versus the euro, yen, sterling and three other currencies, was down 0.54 percent at 95.66 amid the diminished expectations for further U.S. rate hikes.

"Powell's comments Friday that policymakers were flexible and 'listening carefully' to financial markets helped support the impression that the tightening cycle may slow or pause in the coming months," said Shaun Osborne, at in

Interest rate futures traders are now in a chance of a small rate cut this year, while the Fed has indicated that two rate hikes are likely.

Gold rose and palladium hit a record high as the weaker dollar spurred demand for the metals from holders of other currencies. Spot gold was up 0.25 percent at $1,288.02 per ounce.

prices erased early gains after a private report released on Monday showed growth of U.S. services industries slowed to a five-month low in December, signalling the world's largest is decelerating faster than economists' have forecast.

Benchmark 10-year notes shed 7/32 in price to yield 2.6818 percent, from 2.659 percent on Friday.

Stable equity markets and production cuts by the Organization of the Petroleum Exporting Countries helped rise for a fifth straight session. [nL3N1Z708B]

Brent settled up 27 cents at $57.33 a barrel. U.S. crude settled up 56 cents at $48.52 a barrel.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by in New York and in Bengaluru; Editing by and Leslie Adler)

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

First Published: Tue, January 08 2019. 01:46 IST