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Stocks rise, dollar slides, with eyes on U.S.-Sino trade talks

Published 2019-10-10, 11:48 a/m
© Reuters.  GLOBAL MARKETS-Stocks rise, dollar slides, with eyes on U.S.-Sino trade talks
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* Turkey assets under pressure after Syria incursion

* Oil prices rise as OPEC pledges decision on supply

* Copper jumps over 1%, gold slides

By Rodrigo Campos

NEW YORK, Oct 10 (Reuters) - Stocks were near session highs on Thursday after U.S. President Donald Trump said he would meet with China's top trade negotiator on Friday, while oil rose as OPEC pledged a decision on supply at its December meeting.

A drop in the U.S. currency, also tied to trade talks, supported dollar-denominated commodity prices, while sterling jumped after the British and Irish prime ministers said they would continue discussions to try and agree a Brexit deal. were expected to remain volatile, with the focus on the China-U.S. trade talks, as wild overnight gyrations indicated traders were ready to chase every headline.

The euro hit its highest since Sept. 20 versus the dollar as the greenback turned weaker across the board .DXY , partly due to a Bloomberg report about a U.S.-China currency pact to stop the yuan's devaluation. China's offshore yuan hit its strongest levels in more than two weeks.

The risk-on environment weighed on the greenback, and even harder on Japan's yen.

"There is growing optimism that we could get some partial agreement on trade between the U.S. and China. I think both sides are needing to have a win," said Edward Moya, senior market analyst, at OANDA in New York.

"So there is less safe-haven demand for the dollar. If we get some type of trade deal or mini-agreement or mandate, you're going to see that being supportive of European assets. We're seeing the euro now back above $1.10, which has been the resistance," he added.

The dollar index .DXY fell 0.28%, with the euro EUR= up 0.32% to $1.1004.

Sterling GBP= was last trading at $1.2299, up 0.78% on the day and the safe-haven yen suffered through a risk-on session, recently down 0.44% versus the greenback at 107.97 per dollar.

The Turkish lira, under pressure this week after Ankara began air attacks over northern Syria, gained 0.35% versus the U.S. dollar at 5.85. It is still on track for its largest weekly drop in eight.

TRADE THE TWEETS

Trump's tweet announcing his Friday meeting with Liu "is giving market participants a reason to believe that perhaps a trade deal or at least a partial trade deal might be announced as early as tomorrow," said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York.

Separately, Chinese state news agency Xinhua reported Liu said Beijing was willing to reach an agreement with Washington to prevent any further escalation in the trade war. Dow Jones Industrial Average .DJI rose 240.79 points, or 0.91%, to 26,586.8, the S&P 500 .SPX gained 27.86 points, or 0.95%, to 2,947.26 and the Nasdaq Composite .IXIC added 76.91 points, or 0.97%, to 7,980.66.

Stock futures were down over 1% overnight on contradicting reports of the state of talks between China and the United States.

China is unlikely to be willing to make an easy compromise with a U.S. president who seems increasingly vulnerable to domestic political pressure as opposition Democrats seek to impeach him, analysts said.

The pan-European STOXX 600 index .STOXX rose 0.83% and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.79%.

Emerging market stocks rose 0.56%. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.35% higher, while Japan's Nikkei .N225 rose 0.45%.

Treasury yields rose, also on hopes of a trade resolution between the United States and China. However, some investors highlighted the difficulty of using the rapidly shifting headlines on trade to direct investment strategy.

"A choppy overnight session driven by conflicting signals regarding trade negotiations highlights the difficulty in chasing every 5 basis point move in yields, in that the proximate justification can unwind just as quickly," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.

Benchmark 10-year notes US10YT=RR last fell 19/32 in price to yield 1.6525%, from 1.587% late on Wednesday.

The 2-year note US2YT=RR last fell 3/32 in price to yield 1.5161%, from 1.474% late on Wednesday.

Among the widely followed emerging markets, Turkey's government bonds saw another day of falls as investors fretted about the negative international reaction to Ankara's military operation in northeast Syria. was also on the mood in Ecuador, as another day of fierce protests against recent fuel subsidy cuts hammered its bonds on Wednesday. gold fell sharply while copper was on track to post its largest daily percentage gain in a month.

Spot gold XAU= dropped 0.8% to $1,492.87 an ounce. Copper CMCU3 rose 1.65% to $5,778.00 a tonne.

http://tmsnrt.rs/2jvdmXl Global currencies vs. dollar

http://tmsnrt.rs/2egbfVh Emerging markets in 2019

http://tmsnrt.rs/2ihRugV

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