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Canada’s main stock index rose to a month’s high on Monday lifted by a 3.2-per-cent rally in energy stocks as oil prices rose on signs of progress in resolution of a trade dispute between the United States and China.
U.S. President Donald Trump suggested on Friday he could sign an agreement with China’s President Xi Jinping in the U.S. farm state of Iowa, while China’s Foreign Ministry said the two leaders have been in “continuous touch.”
The Toronto Stock Exchange’s S&P/TSX composite index was up 75.74 points, or 0.46 per cent, to 16,669.81, with the energy sector touching its highest since Oct. 7 as crude prices increased.
The materials sector, which includes precious and base metals miners and fertilizer companies, slipped 0.3 per cent. The optimism muted demand for safe-haven gold.
The financial and industrial sectors both closed 0.7 per cent higher.
All three major U.S. indexes posted record closing highs on Monday, extending a recent run of gains, on hopes of a U.S.-China trade deal and an improving U.S. economy.
The Dow Jones Industrial Average rose 115.36 points, or 0.42 per cent, to 27,462.72, the S&P 500 gained 11.46 points, or 0.37 per cent, to 3,078.37 and the Nasdaq Composite added 46.80 points, or 0.56 per cent, to 8,433.20.
Beijing and Washington spoke Friday of progress in trade talks and U.S. Commerce Secretary Wilbur Ross said on Sunday licenses for U.S. companies to sell components to China’s blacklisted Huawei Technologies Co will come shortly.
Washington has effectively banned federal agencies from buying Huawei telecommunications equipment and barred U.S. companies from doing business with Huawei, citing national security.
Gold edged lower while the dollar gained on higher risk appetite as trade hopes grew after Ross said there was no reason a deal could not be on track for signing this month.
A generally upbeat U.S. employment report on Friday added to optimism that the slowing U.S. economy was not headed toward recession.
“Market trends are being influenced by a better risk mood overall,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
European shares rallied more than 1 per cent, with many reaching their highest level since January 2018. The STOXX 600 index of small, mid-sized and large companies across Europe surged to highs last seen in July 2015.
Tariff-exposed European miners gained 2.9 per cent while auto stocks also rose 2.9 per cent. Reports that Fiat Chrysler and Peugeot owner PSA aimed to sign a final merger agreement as early as next month also lifted stocks.
Earlier, trade hopes sent Asian stocks surging, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 1.3 per cent.
MSCI’s gauge of stocks across the globe gained 0.48 per cent while its emerging markets rose 1.34 per cent.
“Signing these deals takes time. All that is needed for markets to be happy right now is for an agreement to be announced,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
The euro slipped as investors awaited Christine Lagarde’s first speech as European Central Bank president. But the single currency remained near its highest levels in weeks after Ross said in the interview that Washington may not slap tariffs on imported vehicles after “good conversations” with automakers in the European Union, Japan and Korea.
The dollar index rose 0.33 per cent, with the euro down 0.19 per cent to $1.1144. The Japanese yen weakened 0.43 per cent versus the greenback at 108.62 per dollar.
Euro zone and U.S. bond yields rose on optimism a U.S.-China trade deal appeared near.
Data on Monday showed morale among investors in the euro zone jumped in November to its highest since June.
Germany’s benchmark 10-year Bund yield was at -0.35 per cent while the benchmark 10-year U.S. Treasury note fell 17/32 in price to push its yield up to 1.7875 per cent.
Spot gold dropped 0.4 per cent to $1,507.25 an ounce.
Oil prices rose on Monday, buoyed by an improved outlook for crude demand as better-than-expected U.S. jobs growth added to market hopes a preliminary U.S.-China trade deal would be reached this month.
Brent crude futures for January settled at $62.13 a barrel, up 44 cents, or 0.7 per cent. December U.S. crude futures rose 34 cents, or 0.6 per cent, to end at $56.54 a barrel.
Market optimism about progress in U.S.-China trade negotiations propelled U.S. stock indexes to record highs on Monday, elevating oil. Energy shares gained the most of the 11 major S&P 500 sectors.
Chinese President Xi Jinping and U.S. President Donald Trump have been in continuous touch through “various means,” China said on Monday, when asked when and where the two leaders might meet to sign a trade deal.
“Both sides (China and the United States) are talking up the trade deal to a large degree. And you have the Federal Reserve leaning into this better-looking economic situation, which lifts all boats,” said John Kilduff, a partner at Again Capital LLC.
On Friday, prices jumped by about $2 a barrel after U.S. officials said a deal could be signed this month.
Improved U.S. jobs growth numbers in October and the upward revisions of the two previous months, reported on Friday, also eased fears of a global economic slowdown that would slow crude demand, oil-market analysts said
Reuters
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November 04, 2019 at 06:00PM
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