A brief break in global trade squalls helped buoy stocks and lifted the US dollar yesterday, though the risk they could return at any time also meant investors were sticking close to ultra-safe government bonds.
After three straight days of losses triggered by political uncertainty, equities on Wall Street opened higher yesterday, encouraged by economic data showing the number of Americans filing for unemployment benefits fell last week.
Big drivers of the gains included Chinese e-commerce giant Alibaba Group Holding Ltd, which jumped more than 4.3 per cent on news that it was planning to list in China.
The Dow Jones Industrial Average rose 276.83 points, or 1.12 per cent, to 25,034.95, the S&P 500 gained 11.95 points, or 0.43 per cent, to 2,761.43 and the Nasdaq Composite added 22.31 points, or 0.3 per cent, to 7,519.12.
Stock markets across the globe got jitters this week as US President Donald Trump fired Secretary of State Rex Tillerson, seen as more supportive of free trade than his replacement, then sought to impose tariffs of up to $60 billion on Chinese imports.
In Europe, there were also concerns that a pair of radical political groups in Italy could join forces to put control of the government in the hands of far-right leaders.
The pan-European FTSEurofirst 300 index rose 0.70 per cent and MSCI’s gauge of global stocks gained 0.30 per cent.
The Chinese state-run tabloid the Global Times said the United States was trying to play the victim with Mr Trump’s recent claims of trade imbalances.
Larry Kudlow, incoming director of the White House national economic council, said on Wednesday China had earned a tough response on trade, even though he has previously criticised “blanket” tariffs.
The dollar index, which measures the greenback against several major currencies, rose 0.22 per cent, with the euro down 0.2 per cent to $1.234.
But the Japanese yen, a safe haven currency that often rises when investors fear uncertainty in global markets, strengthened 0.19 per cent versus the greenback, at 106.15 per dollar.
Looming political anxiety has also been boosting yields all week on long-term government bonds, as investors seek safer securities.
Yesterday was no different, with the premium investors demand to hold Italian 10-year bonds over benchmark German debt widening two basis points to 144 bps.
The US Treasury bond yield curve continued to flatten, with spread between the two- and 10-year yields shrinking to 54.00 basis points on its fourth straight day of contraction, re-approaching the decade low hit in January.
Oil prices held steady, tracking the equities market. US crude rose 0.57 per cent to $61.31 per barrel and Brent was last at $65.15, up 0.4 per cent on the day.