Rising hopes that the United States and China could call a trade war ceasefire at the upcoming G20 summit boosted global stocks yesterday, but gains were held in check as investors looked ahead to a speech by Federal Reserve Chairman Jerome Powell.
Despite US President Donald Trump’s tough remarks on the trade dispute ahead of Saturday’s meeting with Chinese President Xi Jinping, markets focused on comments by White House economic adviser Larry Kudlow, who indicated the two countries could call a truce.
Wall Street opened higher on hopes for a thaw in US-China relations, with industrial stocks, which have borne the brunt of the protracted trade war, becoming one of the biggest gainers.
The Dow Jones Industrial Average rose 197.19 points, or 0.8 per cent, to 24,945.92, the S&P 500 gained 6.49 points, or 0.24 per cent, to 2,688.66 and the Nasdaq Composite added 15.35 points, or 0.22 per cent, to 7,098.05.
The pan-European STOXX 600 index rose 0.04 per cent and MSCI's gauge of stocks across the globe gained 0.08 per cent.
Investors were also eyeing a speech by Federal Reserve Chairman Jerome Powell for insight into the path of interest rate hikes. Mr Powell’s speech will be evaluated for any new indications of caution as global growth slows and as the US central bank comes under renewed criticism from Mr Trump for raising interest rates.
Uncertainty over global trade as well as Brexit and Italy's conflict with the European Union, have supported the US dollar, which hit a two-week high against a basket of currencies.
The dollar steadied ahead of Mr Powell’s speech, with the dollar index rising 0.1 per cent.
The euro was down 0.05 per cent to $1.1282.
Sterling, meanwhile, gained as investors positioned themselves before the Bank of England's analysis of Britain's exit from the European Union.
US government bond yields were up modestly as traders held back from making big moves before the Fed chairman’s speech.
Brent oil futures fell as Saudi Arabia dampened expectations of production cuts by the Opec producer club and inventories of crude remain high.