Stocks in the United States and Asia rallied on hopes for improving trade relations between the US and China, while the US dollar weakened for a fourth straight session against a basket of currencies.
US President Donald Trump pledged on Sunday to help ZTE Corp “get back into business, fast” after a US ban crippled the Chinese technology company, offering a job-saving concession to Beijing ahead of high-stakes trade talks this week.
Growing trade tensions have worried investors, with concerns about a global trade war feeding into increased volatility in the stock market in recent months.
“At least today, investors are looking at that as a sign that meaningful negotiations are going forward between the US and China on trade,” Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama, said of the ZTE announcement.
The Dow Jones Industrial Average rose 141.37 points, or 0.57 per cent, to 24,972.54, the S&P 500 gained 10.73 points, or 0.39 per cent, to 2,738.45 and the Nasdaq Composite added 42.87 points, or 0.58 per cent, to 7,445.76.
Shares of optical components makers Acacia Communications and Oclaro Inc rallied following the ZTE news.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.62 per cent higher, while Japan’s Nikkei rose 0.47 per cent. Investors also pointed to improving sentiment about geopolitical tensions involving North Korea.
US Secretary of State Mike Pompeo said on Sunday that Washington would agree to lift sanctions on North Korea if the country agrees to dismantle its nuclear weapons programme, a move that would create economic prosperity that “will rival” that of South Korea.
The pan-European FTSE-urofirst 300 index lost 0.05 per cent, while MSCI’s gauge of stocks across the globe gained 0.38 per cent, reaching its highest level in about two months.
The dollar fell as investors questioned whether a rally that last week sent the greenback to more than four-month highs had run out of steam.
The dollar index fell 0.15 per cent, with the euro up 0.23 per cent to $1.1969.
“The momentum behind the dollar move is starting to stall a little bit,” Mark McCormick, North American head of FX strategy at TD Securities in Toronto, said yesterday.
Yields on key United States and European bonds rose after a European Central Bank policymaker Francois Villeroy de Galhau said the ECB could give fresh guidance on the timing it its first rate hike as the end of its bond purchases approaches.
Benchmark 10-year Treasury notes last fell 7/32 in price to yield 2.9951 per cent, from 2.971 per cent late on Friday, Benchmark German 10-year bond yields climbed to a 2-1/2-week high.
US crude rose 0.34 per cent to $70.94 per barrel and Brent was last at $77.85, up 0.95 per cent on the day.