Trade hopes lift dollar, crude; doubts slow stock rally
By Herbert Lash NEW YORK (Reuters) - The U.S. dollar and crude prices rose on Tuesday, spurred by optimism that a U.S.-China trade deal may be near, but a rally in global equity markets paused after China pressed U.S. President Donald Trump to remove recently imposed tariffs.
By Herbert Lash
NEW YORK (Reuters) - The U.S. dollar and crude prices rose on Tuesday, spurred by optimism that a U.S.-China trade deal may be near, but a rally in global equity markets paused after China pressed U.S. President Donald Trump to remove recently imposed tariffs.
MSCI's gauge of global stock markets set a 21-month intraday high but pared gains to close lower while the Nasdaq and Dow Jones industrial average eked out record closing highs.
For a graphic on U.S. non-manufacturers ISM index:
https://fingfx.thomsonreuters.com/gfx/mkt/12/8211/8142/191105A.png
U.S. and European government bond yields climbed on trade hopes and upbeat economic data. China's push to remove more U.S. tariffs imposed in September as part of a "phase one" trade deal mostly boosted optimism.
"You're seeing a continuation of optimism around a potential trade agreement to come with China as referenced by the potential removal of tariffs in December," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. "It's just another leg towards a potential agreement."
A trade deal is far from certain, Fawad Razaqzada, technical analyst at FOREX.com, said in an investor note. "If the talks collapse, then so too could the markets," he said.
Solid corporate earnings and upbeat data gave equities a lift. More than three-quarters of the S&P 500 companies that have reported so far have beaten profit expectations, Refinitiv data showed.
ISM's services data showed a reading of 54.7 in October from 52.6 the prior month, exceeding expectations of economists polled by Reuters for 53.4. It was the latest data to ease concerns the U.S. economy.
MSCI's gauge of stock indexes in 47 countries <.MIWD00000PUS> edged lower by 0.01%. The pan-European STOXX 600 index of small, mid-sized and large stocks <.STOXX> and the FTSEurofirst 300 index <.FTEU3> of leading regional shares both rose 0.2%.
On Wall Street, the Dow Jones Industrial Average <.DJI> rose 30.52 points, or 0.11%, to 27,492.63. The S&P 500 <.SPX> lost 3.65 points, or 0.12%, to 3,074.62 and the Nasdaq Composite <.IXIC> added 1.48 points, or 0.02%, to 8,434.68.
In Asia, optimism was fueled by the People's Bank of China's first cut in its medium-term lending rate since early 2016. It was only a token 5 basis points to 3.25%, but it underscored Beijing's desire to support the economy.
Oil prices rose more than 1% on trade hopes. [O/R] Oil was also supported when OPEC Secretary-General Mohammad Barkindo said the market outlook for 2020 may be brighter than forecast, appearing to downplay any need for deeper production cuts.
Brent crude
The safe-haven yen and Swiss franc slid. Gold fell almost 2%, en route to its biggest daily slide in over a month. [GOL/]
The dollar index <.DXY> rose 0.43%, with the euro
U.S. gold futures
Benchmark 10-year U.S. Treasury notes
A steady rise in bond yields has been a big tailwind for financial stocks and one of the biggest contributors to the continued strength in equities, James said.
"Outside some significant macroeconomic downside shock, the market continues to reluctantly trade higher," he said.
The 10-year U.S. Treasury barely yielded 1.5% in early October.
Germany's 10-year bond yield rose as high as -0.308%
For a graphic on World stocks surge $10 in 2019:
https://fingfx.thomsonreuters.com/gfx/mkt/12/8237/8168/Pasted%20Image.jpg
(Reporting by Herbert Lash; Editing by Bernadette Baum and Sonya Hepinstall)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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