By Herbert Lash
NEW YORK (Reuters) - Global stock markets rallied on Monday, lifting Wall Street's three major indexes and a global gauge of equity performance to record highs, after a preliminary U.S.-China trade deal pointed to stronger world growth, helping to drive up oil prices.
The pan-European STOXX 600 index <.STOXX> also hit a record high and the landslide election victory last week by British Prime Minister Boris Johnson pushed the benchmark FTSE 100 <.FTSE> to its biggest single-day gain in almost a year.
Chinese stocks rose to a six-week closing high as investors cheered last week's trade deal and growth in China's industrial and retail sectors beat expectations in November.
But gold held steady and the dollar eased as investors sought clarity on the deal's fine print.
"It's good news but we can't celebrate yet," said Mark Mobius, founding partner of Mobius Capital Partners and former executive chairman of the Templeton Emerging Markets Group.
The "phase one" deal will double U.S. exports to China and has been "absolutely completed," Larry Kudlow, director of the National Economic Council, told Fox News Channel.
The deal suspended a threatened round of U.S. tariffs on $156 billion of Chinese exports that was scheduled to take effect on Sunday. The United States also agreed to halve the tariff rate, to 7.5%, on $120 billion worth of Chinese goods.
MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.77% and the pan-European STOXX 600 index <.STOXX> rose 1.39% to hit record highs.
On Wall Street, the Dow Jones Industrial Average <.DJI> rose 125.93 points, or 0.45%, to 28,261.31. The S&P 500 <.SPX> gained 24.42 points, or 0.77%, to 3,193.22 and the Nasdaq Composite <.IXIC> added 85.10 points, or 0.97%, to 8,819.98.
For much of 2019, investors have fretted over fears of a global recession, in good part driven by the prolonged U.S.-China trade dispute, said Candice Bangsund, a portfolio manager of global asset allocation at Fiera Capital in Montreal.
Equities are poised for further upside because of receding trade headwinds and reflationary efforts by the Federal Reserve, the European Central Bank and the Bank of Japan, she said.
"From a what's priced-in standpoint, it's reduced uncertainty. What's not priced in, though, is the impact it's going to have on the global economy," Bangsund said.
Britain's FTSE 100 <.FTSE> surged 2.25% in the largest single-day gain since late December 2018, while the midcap FTSE 250 <.FTMC> index surged 1.9% to hit a new all-time high.
Domestically-focused stocks benefited from the British election euphoria, with banking heavyweights Lloyds
Oil prices edged higher on hopes energy demand will benefit from the U.S.-China trade deal, but prices remained below Friday's three-month highs.
Brent crude oil futures
Caution over the future path of trade talks weighed on the dollar.
The dollar index <.DXY> fell 0.15%, with the euro
U.S. Treasury yields rose as traders took an optimistic view of the preliminary U.S.-China trade deal and its impact on growth.
Benchmark 10-year notes
U.S. gold futures
(Reporting by Herbert Lash; additional reporting by Ritvik Carvalho in London; Editing by Dan Grebler and Nick Zieminski)
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Updated Date: Dec 17, 2019 03:07:03 IST