Stocks cheered by trade talk, sterling rises on May bets

Stocks cheered by trade talk, sterling rises on May bets

Stock markets around the world rose along with US Treasury yields yesterday as US President Donald Trump sounded upbeat about a China trade deal and sterling bounced on bets that UK PM Theresa May would keep her job.

US Treasury yields advanced in tandem with Wall Street’s gains after Mr Trump said trade talks with China are progressing with discussions under way by telephone and more meetings likely among officials of both countries.

In an interview with Reuters on Tuesday, Mr Trump also said he would intervene in the Justice Department’s case against a top executive at China’s Huawei Technologies if it served national security interests or helped to close a trade deal. But after a spate of dizzying volatility in the past few days, there was some wariness about whether gains would hold.

“There may be some near-term optimism because of the trade headlines but we’ll see where it goes,” said Scott Brown, chief economist at Raymond James in St Petersburg, Florida.

“We have seen a lot of intraday movement lately and we might see the same today and that’s a sign the market is looking at what the appropriate level should be.”

The Dow Jones Industrial Average rose 348.46 points, or 1.43 per cent, to 24,718.7, the S&P 500 gained 39.98 points, or 1.52 per cent, to 2,676.76 and the Nasdaq Composite added 144.51 points, or 2.06 per cent, to 7,176.34.

The pan-European STOXX 600 index rose 1.88 per cent and MSCI’s gauge of stocks across the globe gained 1.76 per cent.

The British pound sterling jumped off 20-month lows as Ms May vowed to fight a challenge to her leadership saying a change could jeopardise Britain’s divorce from the EU.

The currency had tumbled on concerns about vote of no confidence in the Prime Minister but traders bet she would survive after a number of colleagues backed her, isolating rivals who want a clean, sudden break from the EU.

Sterling was last trading at $1.2651, up 1.34 per cent on the day.

The dollar index fell 0.4 per cent, with the euro up 0.42 per cent to $1.1362.

The euro was helped by a report Italy would scale down its budget deficit target to between 2.0-2.2 per cent of gross domestic product, below the previous target of 2.4 per cent.

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