New US-China trade talks propel stocks to one-month highs
United States stocks are also climbing higher due to better-than-expected news on the jobs front.
Stocks hit one-month highs worldwide on Thursday as investors moved away from safe-haven assets such as bonds and gold on renewed hope for progress in United States-China trade negotiations and upbeat news on the US jobs market.
The announcement that top negotiators from the US and China will meet in early October in Washington raised hopes of a possible resolution to the two countries’ brutal trade war, which has wreaked havoc on the global economy.
“Optimism rules the day on the potential for some sort of trade deal between now and year end,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia in the US. “People had been pessimistic but moods can shift in a second, and they have.”
“We’re in a headline-driven market and the headlines over the last couple of days have been pretty positive,” Tuz added.
On the jobs front, US private payrolls increased in August at their fastest pace in four months, according to ADP, blowing past analysts’ estimates ahead of Friday’s more comprehensive US labour market report from the US Department of Labor.
A separate report showed the US services industry rebounded last month to its fastest expansion since February, bouncing back from a three-year low, according to the Institute for Supply Management’s non-manufacturing purchasing managers’ index.
In late morning trading in New York City, the Dow Jones Industrial Average was up 446.46 points, or 1.69 percent, to 26,801.87; the S&P 500 was higher by 41.5 points, or 1.41 percent, to 2,979.28; and the Nasdaq Composite added 138.85 points, or 1.74 percent, to 8,115.73.
European and emerging markets stocks jumped on hopes that next month’s US-China trade talks would move the world’s two largest economies closer to ending their cantankerous dispute, which has pushed major economies towards recession.
The pan-European STOXX 600 index rose 0.63 percent and MSCI’s gauge of stocks across the globe gained 1.17 percent.
Emerging market stocks rose 1.25 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.06 percent higher, while Japan’s Nikkei rose 2.12 percent.
ADP’s private employment report helped US Treasury yields extend their earlier gains.
The dollar held its losses against a basket of world currencies on the jobs data. Earlier news of a fresh round of trade talks weighed on the dollar and the yen while boosting riskier currencies.
The dollar index fell 0.07 percent, with the euro up 0.06 percent to $1.104.
The Japanese yen weakened 0.61 percent versus the greenback at 107.06 per dollar, while sterling was last trading at $1.2321, up 0.58 percent on the day.
The tide of trade optimism also lifted oil prices, but the gain was capped by a report showing an unexpected increase in US crude inventories.
US crude rose 1.88 percent to $57.32 per barrel, and Brent crude was last at $61.94, up 2.04 percent on the day.
Gold retreated from its six-year peak as investors shifted to riskier assets. Spot gold dropped 2.5 percent to $1,513.84 an ounce.