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Stocks close in on record highs on U.S.-China trade deal hopes

Published 2019-11-07, 07:49 p/m
© Reuters.  Stocks close in on record highs on U.S.-China trade deal hopes
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* MSCI's global gauge near record 2018 peak

* Beijing says U.S., China agree to cancel tariffs in phases

* Sources say the plan meets opposition within White House

* Bond yields soar

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Hideyuki Sano

TOKYO, Nov 8 (Reuters) - World stocks rallied to near record highs on Friday after China said it had agreed with the United States to cancel tariffs in phases, a key demand of Beijing for sealing a deal to end a trade war that has slowed economic growth and roiled markets.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose slightly to stand at 543.70, just a hair off the record high of 550.63 reached in January 2018.

The index compiler's gauge of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.2% in early trade while Tokyo's Nikkei .N225 jumped 0.75% to a 13-month high.

China and the United States have agreed to roll back tariffs on each others' goods as part of the first phase of a trade deal, officials from both sides said on Thursday, in further signs of progress even as both side continue to haggle over several contentious issues. the U.S.-China dispute seems to be heading for a resolution while the developed world is adopting very easy monetary policy, risk assets are enjoying the tail wind," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

The Chinese commerce ministry, without laying out a timetable, said the two countries had agreed to cancel the tariffs in phases.

But multiple sources familiar with the talks said the plan faces fierce internal opposition at the White House and from outside advisers. U.S. stocks pared gains on the report of the opposition to the deal in Washington, the Dow and S&P 500 did close at all-time highs, while the Nasdaq missed a record close by less than two-tenths of a point.

The S&P 500 .SPX gained ended 0.27% higher at 3,085.18.

The pan-European STOXX 600 index .STOXX has also pierced through its January 2018 peak to come within a striking distance of its record high set in April 2015.

As investors wind back their buying in safe assets, the 10-year U.S. Treasuries yield rose 11.8 basis points to 1.930% US10YT=RR , marking the biggest daily increase since Nov. 9, 2016, which followed the surprise election victory by Donald Trump.

The yield has jumped to as high as 1.973%, a three-month peak, on Thursday and last stood at 1.924%.

The 10-year Japanese government bond yield JP10YT=JBTC rose to minus 0.050%, a 5-1/2-month high, as expectations of a Bank of Japan rate cuts dissipated in the past week or so.

In the currency market, the yuan stood firm while safe-haven currencies lost their edge.

The offshore yuan traded at 6.9976 yuan per dollar CNH= , having hit a three-month high of 6.9530 per dollar in U.S. trade on Thursday.

The dollar climbed to 109.31 yen JPY= , reaching a five-month high of 109.49 the previous day.

The euro slipped to $1.1050 EUR= , having marked a low of $1.10355 in U.S. trade, its weakest since Oct. 16.

That helped to push up the dollar index =USD to three-week highs of 98.236. The index last stood at 98.134.

Gold also eased to $1,467.9 per ounce XAU= , having hit a five-week low of $1.460.7 on Thursday.

Oil prices gained on the U.S.-China trade deal hopes. U.S. West Texas Intermediate (WTI) crude CLc1 lost 0.1% to $57.09 per barrel in Asia but has gained 1.4% so far this week.

(Editing by Shri Navaratnam)

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