BUSINESS

Stock markets rally on fresh trade talk hopes

August 19, 2019

NEW YORK/LONDON — US stocks surged on Monday, building on previous session's rally, fueled by growing hopes that major economies would act to prop up slowing growth, while technology stocks got a lift from trade optimism.

China's central bank unveiled a key interest rate reform on Saturday to help steer borrowing costs lower for companies, close on the heels of reports of a potential German economic easing.

After the three main Wall Street indexes racked up their third straight weekly loss despite Friday's bounce, investors will look to weigh trade risks and signs of slowing growth against the potential for more action from the US Federal Reserve and others in September.

At 11:06 a.m. ET, the Dow Jones Industrial Average was up 260.43 points, or 1.01%, at 26,146.44, the S&P 500 was up 34.36 points, or 1.19%, at 2,923.04. The Nasdaq Composite was up 112.95 points, or 1.43%, at 8,008.95.

All of the 11 major S&P sectors were higher with a 1.7% rise in energy sector leading the gainers. Defensive consumer staples, utilities and real estate posted the smallest gains.

The focus this week will be on Wednesday's release of minutes from the Fed's July policy meeting, when the central bank cut rates for the first time in more than a decade, and Chair Jerome Powell's speech at a central banks meeting in Jackson Hole on Friday.

"There is hope you are going to see some sort of stimulus by the United States ... Some believe the selloff recently was a bit overdone," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

Stock markets rallied Monday after US President Donald Trump's top economic adviser hailed "positive" trade talks with Chinese negotiators.

"As the new week kicks off, stocks are in demand amid increased optimism over US and China reaching a trade deal and as investors anticipate stimulus measures to shore up slowing economies," noted Fiona Cincotta, analyst at City Index trading group.

"After a disastrous previous week which saw equities experience the worst week this year, risk appetite was showing strong signs of improving."

Washington and Beijing are working to revive pivotal talks aimed at ending a trade war that has roiled world markets, Trump's chief economic advisor Larry Kudlow said Sunday.

The US president himself weighed in on Twitter, saying, "We are doing very well with China, and talking!"

In another tweet, he added that the US economy was "poised for big growth after trade deals are completed," and that China is "eating Tariffs."

There remains a high level of concern however about the global outlook and particularly the US economy after the yield on 10-year US Treasury bonds last week slid below that of the two-year note, while the 30-year yield fell below two percent for the first time ever.

This so-called "inversion" -- when short-term interest rates are higher than longer-term ones -- is viewed as a harbinger of recession.

A majority of economists expect a US recession in the next two years, but have pushed back the onset, according to a survey Monday from the National Association for Business Economists.

In London, FTSE 100 was Up 1.0 percent at 7,189.65 points (close).

In Frankfurt, DAX 30 was up 1.3 percent at 11,715.37 (close).

Paris’ CAC 40 was up 1.3 percent at 5,371.56 (close).

Tokyo’s Nikkei 225 was up 0.7 percent at 20,563.16 (close).

Hong Kong’s Hang Seng was up 2.2 percent at 26,291.84 (close).

Shanghai’s Composite was up 2.1 percent at 2,883.10 (close).

Euro/dollar up at $1.1093 from $1.1089 at 2100 GMT Friday.

Brent North Sea crude was up 69 cents at $59.33 per barrel. West Texas Intermediate was up 82 cents at $55.63 per barrel. — Agencies


August 19, 2019
40 views
HIGHLIGHTS
BUSINESS
4 hours ago

Infinix Note 40 Pro 5G - The gaming powerhouse at a JAW dropping price of SR999

BUSINESS
8 hours ago

Xiaomi: Chinese smartphone giant taking on Tesla

BUSINESS
21 hours ago

Saudi National Bank appoints Tareq Al Sadhan as new CEO