Stocks around the world extended recent gains and oil prices jumped on Wednesday on optimism that the United States and China may be inching towards a trade deal, soothing fears of an all-out trade war and its possible impact on global growth.
Optimism regarding a trade deal boosted U.S. Treasury yields to their highest this year, while the U.S. dollar extended its losses after minutes from a Dec. 18-19 Federal Reserve policy meeting showed that many Fed policymakers said the central bank could be patient on future rate hikes.
Delegations from China and the U.S. ended talks in Beijing on Wednesday amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased access to China’s markets.
China has pledged to purchase “a substantial amount” of agricultural, energy and manufactured goods and services from the United States, the U.S. Trade Representative’s office said on Wednesday.
MSCI’s all-country index climbed 1.14 per cent for a fourth day of gains.
That added to advances since last week in equity markets around the world, following a strong U.S. employment report and comments from the Federal Reserve chief that calmed worries that U.S. interest rate hikes would hurt growth.
A range of Federal Reserve policymakers said last month they could be patient about future interest rate increases and a few did not support the central bank’s rate increase that month, minutes from their Dec. 18-19 policy meeting showed.
On Wednesday, a clutch of U.S. Federal Reserve officials said they would be cautious about any further increases in interest rates so that the central bank could assess growing risks to an otherwise-solid U.S. economic outlook.
Canada’s main stock index hit nearly four-week high on Wednesday, driven by optimism that United States and China could be nearing a trade deal, which also boosted oil prices.
The Toronto Stock Exchange’s S&P/TSX rose 199.58 points, or 1.37 per cent, to 14,804.73.
Energy stocks jumped 2 per cent, including a 4.1-per-cent increase in Crescent Point Energy Corp. and 2.8-per-cent rise in Husky Energy Inc.
Marijuana stocks propelled a 6.2-per-cent increase in health care stocks. Canopy Growth Corp. finished up 13.3 per cent.
Leading the index were New Gold Inc., up 12.6 per cent, and Precision Drilling Corp., higher by 11.3 per cent.
Lagging shares were Pretium Resources Inc., down 11.1 per cent, Eldorado Gold Corp., down 2.5 per cent, and Onex Corp., lower by 2.2 per cent.
The U.S. stock market was supported by advances by technology and other trade-sensitive sectors. The benchmark S&P 500 index is up by about 10 per cent from 20-month lows hit around Christmas.
“If you want to gauge how investors are viewing the trade talks, just watch tech, and semiconductors in particular,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.
The Dow Jones Industrial Average rose 91.54 points, or 0.38 per cent, to 23,878.99, the S&P 500 gained 10.55 points, or 0.41 per cent, to 2,584.96 and the Nasdaq Composite added 60.08 points, or 0.87 per cent, to 6,957.08.
The pan-European STOXX 600 benchmark closed up 0.53 per cent, its highest close in nearly four weeks.
Optimism that the trade standoff would be resolved also lifted oil prices.
Oil prices jumped about 5 per cent on Wednesday to their highest levels in nearly a month as U.S.-China trade talks raised hopes of easing tensions between the world’s two largest economies, while OPEC-led crude output cuts also provided support.
West Texas Intermediate (WTI) crude futures rose $2.58 to settle at $52.36 a barrel, a 5.18-per-cent gain, the first time this year that WTI has topped $50.
Brent crude futures gained $2.72, or 4.63 per cent, to settle at $61.44 a barrel.
The sharp gains extended a rally that has pushed futures up about 14 per cent in 2019.
Reuters