World stock markets rallied yesterday, while the US dollar slipped, amid expectations that fresh US and Chinese tariffs on reciprocal imports will be less harsh than feared.
Still, investors remained cautious about the next steps in the US-Sino trade war, driving long-dated US Treasury yields lower. But the equity market’s early take of the latest trade moves was that it was mostly benign for the US economy.
Larry Fink, chief executive of BlackRock Inc., the world’s largest asset manager, said the United States was “a big winner” in the trade spat with China “in the short-term.”
The greenback fell amid a drop in safe-haven demand for the currency and a resurgence in global risk appetite on relief that the new round of US and Chinese import tariffs was less harsh than feared.
The Dow industrials index became the last of key US stock indexes to regain record territory, while the benchmark S&P 500 opened at a fresh record high.
The MSCI index tracking shares in 47 countries rose 0.71 per cent to a three-week high, supported by gains in Europe and Asia.
The pan-European FTSEurofirst 300 index of leading regional shares closed up 0.75 per cent, as investors focused on bullish macroeconomic and corporate news.
Consumer confidence and small business optimism remain near post-crisis highs, while there’s still more of a positive impact from earnings and US tax reform, along with two more quarters of corporate repatriation of money held abroad, analysts said.
On Wall Street, the Dow Jones Industrial Average rose 220.45 points, or 0.83 per cent, to 26,626.21. The S&P 500 gained 17.11 points, or 0.59 per cent, to 2,925.06 and the Nasdaq Composite added 60.28 points, or 0.76 per cent, to 8,010.31.
Upbeat US economic data pushed debt yields a little higher, but that was short-lived as investors remained focused on the US-Chinese trade conflict.
The dollar index, tracking it against six major currencies, fell 0.54 per cent, with the euro up 0.69 per cent to $1.1752. The Japanese yen weakened 0.16 per cent versus the greenback at 112.47 per dollar.
The dollar had benefited from growing trade-related tensions in recent months, as investors bet it would gain at the expense of riskier currencies.
Oil prices steadied after US President Donald Trump called on the Organization of Petroleum Exporting Countries to “get prices down now,” slowing an upward surge that had pushed the market towards four-year highs.
Brent crude oil was down 50 cents at $78.90 a barrel. US light crude oil slid 16 cents at $70.96 a barrel after rising nearly two per cent on Wednesday.