What you need to know before the opening bell: Oct. 9, 2019
Stocks rose in the U.S. and Europe as China revived hopes of progress in trade talks with the Trump administration this week despite potential headwinds. Treasuries slipped.
Chipmakers led the S&P 500 Index higher after Bloomberg reported that China is still open to a partial trade deal with the U.S. The Stoxx Europe 600 Index advanced for the third day in four. The dollar weakened after two days of gains and 10-year Treasury yields climbed to about 1.55 per cent.
High-level U.S.-China trade talks are set to resume in Washington on Thursday after what seemed to be escalating tensions to start the week. While a broad agreement seems unlikely, China signaled it’s open to a limited deal, provided no more tariffs are imposed, according to an official. In return, Beijing would offer non-core concessions like purchases of agricultural products without giving in on major sticking points, the official said, without offering further details.
“It’s encouraging to hear China say that they want to make some sort of small deal,” said Randy Frederick, a vice president of trading and derivatives who helps oversee US$3.7 trillion in assets at Charles Schwab. “If we can get the two sides to agree to not raise tariffs any further than where they are, that would be positive.”
Investors are also looking to gauge the next moves by major central banks. Chairman Jerome Powell said Tuesday that the Federal Reserve will resume purchases of Treasury securities to avoid a repeat of recent turmoil in money markets, while hinting at the possibility of another rate cut. Minutes of the Fed’s most recent rates meeting will be released Wednesday, providing further insight into policy makers’ thinking ahead of their next meeting at the end of the month.
Elsewhere, benchmark equity gauges fell across Asia, except for those in Shanghai and Mumbai. Bond yields dropped in Greece after the region’s most-indebted country sold bills at negative yields. Gold held above US$1,500 an ounce.
The yuan climbed offshore and headed to its biggest gain in almost a month, helped by trade optimism and a stronger-than-expected daily fixing. West Texas crude touched per US$53 a barrel.
Here are some key events coming up this week:
- On Wednesday, minutes will be released from the last policy meeting of the Fed’s rate-setting committee. The account of the European Central Bank’s last gathering is due Thursday.
- Chinese President Xi Jinping is scheduled to meet Indian Prime Minister Narendra Modi on Friday and Saturday for an informal summit.
- The U.S. releases a key measure of inflation on Thursday.
Here are the main moves in markets:
- The S&P 500 Index rose 0.7 per cent as of 9:50 a.m. in New York.
- The Stoxx Europe 600 Index gained 0.5 per cent.
- The MSCI Emerging Market Index dipped 0.1 per cent.
- The Bloomberg Dollar Spot Index declined 0.1 per cent.
- The euro rose 0.2 per cent to US$1.098.
- The British pound rose 0.1 per cent to US$1.2231.
- The Japanese yen depreciated 0.3 per cent to 107.38 per dollar.
- The yield on 10-year Treasuries added three basis points to 1.56 per cent.
- Britain’s 10-year yield climbed four basis points to 0.45 per cent.
- Germany’s 10-year yield rose three basis points to -0.57 per cent.
- West Texas Intermediate crude climbed 1.4 per cent to US$53.36 a barrel.
- Gold rose 0.1 per cent to US$1,506.79 an ounce.
--With assistance from Cormac Mullen and Adam Haigh.