(Bloomberg) – Asian stocks and US stock futures climbed after China said it would hold trade talks with US counterparts next month, building on a broad rally in global stocks amid an improvement in investor sentiment. The yuan advanced, and the dollar stabilized after falling most since June.
The S&P 500 futures expanded the gain to around 1% and the yen dipped with treasuries. Shares in Japan outperformed, and also rose in Australia and South Korea. China announced that its trade dealers will travel to Washington early next month for talks with US counterparts, which investors interpreted as increasing the chances of a customs war solution following weekly uncertainty and escalation.
Hong Kong shares had more modest gains following yesterday's 4% surge, as City Manager Carrie Lam formally withdrew controversial legislation that would have allowed expansions to the mainland. The pound was a win after Britain's parliament rejected Prime Minister Boris Johnson's demand for an early election and took further steps to block an imminent no-deal Brexit.
The rise in stocks has brought the S&P 500 index back to within 3% of an all time event risk seems to be waning, from a possible Chinese accident in Hong Kong to confrontations between the EU and two of its biggest members. At the same time, investors are on the lookout for all US-China trade news and signals from the Federal Reserve about how much it could facilitate this year to avert an economic downturn.
"Rather than being scared away from markets because of this volatility, it's time to take advantage of it," Ann Miletti, portfolio manager at Wells Capital Management, told Bloomberg TV. "I'm going to hold the Fed to the floor, and hopefully they will take timely action."
Meanwhile, China signaled that a reduction in the amount of banks holding in reserve is on the way. The Cabinet said it wanted a "timely" reduction in bank deposit conditions, broad and targeted, as well as the use of other tools to support the economy. The call comes as more and more economists lower their GDP forecasts for 2020 to below 6%.
Elsewhere, oil squeezed over $ 56 a barrel following trade news. In the United States, with Florida orange groves seemingly escaping major damage from Hurricane Dorian, the concern now faces soy, grain and cotton fields as well as livestock in Georgia and the Carolinas as the storm plunges north. Platinum futures increased over $ 1,000 per ounce.
Here are some important events coming up:
Fed speakers this week include Fed leader Jerome Powell on Friday. The US labor reports on Friday are estimated to show unfulfilled profits that were not followed up by 160,000 in August, compared with 164,000 the month before. Estimates are that unemployment should be steady at 3.7% and the average hourly wage increase slowly to 3.0%.
These are the most important features of the markets:
Japan's Topix index rose 2.1% per share. 11:26 in Tokyo. The Shanghai Composite Index added 1.6%. Hong Kong's Hang Seng index rose 0.5%. Australia's S & P / ASX 200 index rose 1%. South Korea's Kospi index rose 1.2%. Investments in the S&P 500 index added 1%. The underlying meter rose 1.1% Wednesday.
The Yen fell 0.3% to 106.69 per dollar. The yuan at sea rose 0.2% to $ 7.1313 per dollar. Bloomberg Dollar Spot Index steady after falling 0.6%, the largest slide since June 20. Euro bought $ 1,1037. The British pound was at $ 1,2246.
The return on 10-year government bonds rose five basis points to 1.52%. Australia's 10-year return rose six basis points to 0.99%.
Intermediate crude oil in Texas added 0.5% to $ 56.53 a barrel. Gold fell 0.5% to $ 1,544.19 an ounce.
– With assistance from Randall Jensen and Vildana Hajric.
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