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Stocks Edge Higher on Trade Optimism, ECB Stimulus: Markets Wrap

Vildana Hajric
Stocks Edge Higher on Trade Optimism, ECB Stimulus: Markets Wrap

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Stocks eked out a gain on optimism about the outlook for a trade agreement between the U.S. and China and after Europe’s central bank announced a fresh round of stimulus.

The S&P 500 Index closed just 0.5% below its all-time high after a report that American officials have discussed offering a limited trade agreement to China. That followed a decision by the European Central Bank to cut its main rate to minus 0.5% and buy 20 billion euros ($22 billion) of bonds a month. The euro gained and sovereign bonds were mixed.

Any steps by China and the U.S. to ease tensions ahead of face-to-face talks in Washington in the coming weeks would support sentiment as investors await monetary decisions from more of the world’s major central banks. The ECB changed its guidance on interest rates to say they’ll stay at present or lower levels until the outlook for inflation “robustly” converges to its goal of just below 2%.

“It’s a perfect storm of good news,” said Chris Gaffney, president of world markets at TIAA. “Investors are feeling relief now and feeling that perhaps things aren’t quite as bad as they seemed two months ago.”

The Federal Reserve is due to meet next week as economic indicators give mixed signals about whether the record-long expansion will end soon. The dollar weakened.

Elsewhere, European equities edged higher. Turkey’s lira rallied after its policy makers cut interest rates by more than forecast. Oil turned lower as the International Energy Agency warned OPEC it faces a “daunting” surplus of crude in 2020.

Hong Kong equities bucked the advance in Asia, dragged lower by shares of the city’s exchange following a surprise takeover bid for its London counterpart.

Here are the main moves in markets:

Stocks

The S&P 500 Index climbed 0.3% at the close in New York.The Stoxx Europe 600 Index rose 0.2%.The Nikkei-225 Stock Average rose 0.8% for its eighth straight gain, the best streak in a year

Currencies

The Bloomberg Dollar Spot Index slipped 0.2%.The euro rose 0.5% to $1.1065.The British pound rose 0.1% to $1.2339.The Japanese yen fell 0.3% to 108.14 per dollar.

Bonds

The yield on 10-year Treasuries rose four basis points to 1.78%.Germany’s 10-year yield rose five basis points to -0.52%.Britain’s 10-year yield rose three basis points 0.67%.Italy’s 10-year yield decreased 11 basis points to 0.86%.

Commodities

Gold added 0.1% to $1,499.21 an ounce.West Texas Intermediate crude dipped 1.3% to $55.05 a barrel.Silver fell 0.2% to $18.08 per ounce.

--With assistance from Yakob Peterseil and Reade Pickert.

To contact the reporter on this story: Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh, Dave Liedtka

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