North American stocks and emerging market currencies rebounded on Thursday after China said it will hold trade talks with the United States later in August and Turkey’s lira continued its recovery.
China said that a delegation led by its vice commerce minister would travel to the United States for talks on Aug. 21 and 22, raising hopes that Beijing and Washington may resolve the escalating tariff war that has roiled financial markets since early March.
The Chinese yuan recovered from its weakest level since January 2017, and the U.S. dollar pared losses from earlier in the day.
“The news of China coming back to the negotiating table is providing relief and you are starting to see markets stabilize a little bit,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in Chicago.
The Turkish lira built upon Wednesday’s gains, when Qatar pledged to invest $15-billion in Turkey. Other emerging market currencies, such as Brazil’s real and Mexico’s peso, also rose.
The Turkish lira rose 2.7 per cent to 5.80 per dollar.
On Thursday, Turkish Finance Minister Berat Albayrak assured international investors on a conference call that the country would emerge stronger from its currency crisis and that its banks were healthy.
Metals prices climbed as well, though MSCI’s index of emerging market stocks dipped after having edged up into positive territory earlier in the day.
MSCI’s index of world stocks rose 0.7 per cent. Emerging market stocks dipped 0.2 per cent a day after falling more than 20 per cent from their January intraday high.
In Toronto, the S&P/TSX Composite index was up 77.15 points, or 0.48 per cent, at 16,225.65.
The energy sector climbed 0.5 per cent as oil rose on steadying global markets.
The financials sector gained 0.6 per cent and the industrials sector 0.4 per cent.
In U.S. markets, the S&P 500 index rose 22 points, or 0.8 per cent, to 2,840. The Dow Jones Industrial Average rose 396 points, or 1.6 per cent, to 25,558. The Nasdaq composite rose 32 points, or 0.4 per cent, to 7,806.
Walmart jumped 9.3 per cent Thursday after reporting its strongest sales growth in a decade as well as a surge in online sales.
Boeing jumped 4 per cent, and Teva Pharmaceuticals rose 7.3 per cent after regulators approved its generic version of Mylan’s EpiPen allergy treatment.
The pan-European FTSEurofirst 300 index rose 0.44 per cent.
The Shanghai Composite Index closed down 0.6 per cent, while Hong Kong’s Hang Seng index ended 0.8 per cent lower. Hopes that China and the United States could ease trade tensions helped Chinese stocks pare losses.
In currency markets, the dollar index fell 0.06 per cent, while the euro was up 0.19 per cent to $1.1365 after closing Wednesday at its lowest point since July 2017.
The Chinese yuan gained 1.1 per cent to 6.87 per dollar.
Copper rose 1.54 per cent to $5,890.50 a ton, after having confirmed a bear market on Wednesday when it closed 20.9 per cent below its recent high reached on June 7.
U.S. Treasury yields rose on the news of U.S.-China trade talks. Benchmark 10-year notes last fell 6/32 in price to yield 2.8732 per cent, from 2.851 per cent late on Wednesday.
Oil rose slightly as global markets steadied on Thursday, recovering some of the previous day’s 2-per-cent slide, though a weakening outlook for crude demand kept prices in check.
The oil market slid on Wednesday as data showing a large build in U.S. inventories fed concern about the fuel demand outlook, while crude was also pressured by broader selling of industrial commodities such as copper.
“There’s still an overhang from the report yesterday,” said John Kilduff, a partner at Again Capital Management in New York, citing surging imports that boosted inventories despite high refinery run rates.
China and the United States have implemented several rounds of tariffs and threatened further duties on exports worth hundreds of billions of dollars, which could knock global economic growth.
The crisis gripping the Turkish lira has rattled emerging markets and reverberated across equities, bonds and raw materials.
Brent crude oil futures settled 67 cents higher at $71.43 a barrel, while U.S. crude futures rose 45 cents to $65.46 a barrel.
Earlier, U.S. crude had hovered around its 200-day moving average of $65.18 a barrel, an important technical benchmark. Moving below that level could trigger a further surge downward.
“The growth story is now more or less a U.S. growth story. The rest of the world isn’t playing along any longer,” said Saxo Bank commodities strategist Ole Hansen.
“It also really reflects how the theme in the commodities market has so quickly changed from being one where the worry was about supply, with Iran sanctions for oil or Chilean (miner) strikes for copper, and now the focus is on demand.”
Brent crude futures are resting on the 200-day moving average, a key technical level, for the first time in a year. Analysts say a break below this point could trigger another swift sell-off.
Reuters and The Associated Press