A gauge of global equity markets climbed on Wednesday, amid small signs of progress in the trade war between the United States and China, while bond yields rose as investors remained unsure what stimulus measures the European Central Bank will provide at its Thursday meeting.
Stocks on Wall Street rose, buoyed by optimism on the trade front after China announced its first batch of tariff exemptions for 16 types of U.S. products, days ahead of a planned meeting between trade negotiators.
“Maybe a little bit of an olive branch. The market has been sensitive to any developments on the China-U.S. trade war front and this would be consistent with that,” said David Joy, chief market strategist at Ameriprise Financial in Boston.
“My own view is we shouldn’t read too much into it because it is something of long shot we are going to get any meaningful breakthrough on that situation any time soon.”
The Toronto Stock Exchange’s S&P/TSX composite index was up 73.80 points, or 0.55 per cent, at 16,611.14.
Seven of the index’s 11 major sectors were higher.
Tech stocks jumped 1.9 per cent, led by a 5.5-per-cent rise in BlackBerry Ltd. and 3.5-per-cent increase in Shopify Inc.
The energy sector finished down 0.01 per cent, while the materials sector, which includes precious and base metals miners and fertilizer companies, added 0.4 per cent as gold futures edged higher.
Other stocks leading the index were OceanaGold Corp., up 4.9 per cent, and SNC-Lavalin Group Inc., higher by 4.5 per cent.
Lagging shares were Gran Tierra Energy Inc., down 2.4 per cent, Pason Systems Inc., down 2.4 percent, and Enerflex Ltd., lower by 2.2 per cent.
The Dow Jones Industrial Average rose 226.6 points, or 0.84 per cent, to 27,136.03, the S&P 500 gained 21.34 points, or 0.72 per cent, to 3,000.73 and the Nasdaq Composite added 85.52 points, or 1.06 per cent, to 8,169.68.
The trade hopes also aided in pushing European shares to close at a six-week high, with shares of London Stock Exchange ending the session up 5.9 per cent after Hong Kong Exchanges and Clearing made a surprise $39 billion takeover approach.
The pan-European STOXX 600 index rose 0.85 per cent and MSCI’s gauge of stocks across the globe gained 0.56 per cent, on pace for its sixth straight day of gains.
U.S. Treasury yields rose for a third day, tracking those in the euro zone bond market, as investors were unsure about the stimulus measures the ECB will engage in, with a late report on Tuesday the central bank may delay quantitative easing adding to the uncertainty.
The 10-year yield hit a high of 1.752 per cent, its highest level in just over a month.
Benchmark 10-year notes last fell 10/32 in price to yield 1.7368 per cent, from 1.702 per cent late on Tuesday.
The European Central Bank’s meeting comes ahead of next week’s policy meeting by the U.S. Federal Reserve which is still widely expected to cut interest rates even as economic data showed producer prices unexpectedly rose in August.
Expectations for a 25-basis-point cut by the Fed at its next meeting stand at 88.8 per cent, according to CME’s FedWatch, down from 92.3 per cent on Tuesday. Market participants currently see no chance of a 50-basis-point cut from the central bank.
U.S. President Donald Trump pushed the Fed to cut interest rates to zero or into negative territory in a pair of Twitter posts on Wednesday.
In currencies, the euro weakened to a one-week low against the dollar ahead of the ECB meeting, while the dollar was on track for its best day in nearly two weeks against a basket of major currencies.
The dollar index rose 0.33 per cent, with the euro down 0.34 per cent to $1.1006.
Oil prices tumbled more than 2 per cent on Wednesday after a report that U.S. President Donald Trump weighed easing sanctions on Iran, which could boost global crude supply at a time of lingering worries about global energy demand.
Market participants cited a report from Bloomberg that Trump discussed easing sanctions on Iran to help secure a meeting with Iranian President Hassan Rouhani later this month.
The Bloomberg report, attributed to three unnamed sources, said then-National Security Advisor John Bolton argued against such a step. (https://tinyurl.com/y4wcevfp)
Brent crude settled $1.57, or 2.5 per cent lower, at $60.81 after hitting a session low of $60.52, while U.S. West Texas Intermediate fell $1.65, or 2.9 per cent to end the session at $55.75 a barrel after sliding as low as $55.61.
Bolton’s departure removes one of the strongest advocates of a hard line towards Iran from Trump’s White House.