U.S. stocks halted a two-day slide and Treasuries tumbled after the Trump administration de-escalated its trade war with China. Oil surged and gold fell.

The S&P 500 Index jumped as much as 2 per cent after trade officials granted a grace period before tariffs take effect on a broad swath of consumer goods Americans shoppers covet at the holidays. Makers and sellers of consumer electronics, toys and apparel led the advance.

  • Apple surged more than 4 per cent to pace gains among hardware makers

  • Best Buy rose the most in the S&P 500, while Target added 3 per cent

  • Gap and L Brands jumped more than 3 per cent; Hasbro surged

  • Soybeans rose 1.5 per cent, oil added 3.8 per cent

  • Gold lost more than US$50 an ounce from its high

 

The trade headlines sparked demand for risk assets that had been under pressure for more than a week as investors grew increasingly concerned the spat with China would slam global growth. President Donald Trump said he delayed the tariffs to spare the Christmas shopping season after his representatives had a “productive” call with China.

“This news creates a lot of this upside volatility,” said Bruce Bittles, chief investment strategist at Robert W. Baird. “If the news is sustainable and indeed they are moving to a trade agreement, this is a very important development and we can go to new highs.”

Before the trade headlines landed, fresh inflation data showed an unexpectedly hot reading, denting arguments for cutting interest rates and flattening the Treasury yield toward inversion. The spread between two- and 10-year yields hit the narrowest since 2007. The tariff detente did halt the bond rally, pushing the 10-year rate toward 1.7 per cent.

Some investors also remained cautious about the prospects for a trade truce as signs of the war’s impact grow. Singapore’s government cut its forecast for economic growth this year to almost zero. In Europe, Henkel was among the worst-performing stocks after missing quarterly profit estimates, which the detergents maker blamed on the trade conflict and a competitive retail environment.

“It’s an encouraging first steps but it’s difficult to speculate how far it will go,” Peter Jankovskis, co-chief investment officer at Oakbrook Investments. “We’ve certainly gotten into these situations before where the market believed we were headed toward a deal and then it was derailed by comments from various officials.”

Meanwhile, the situations in Hong Kong and Argentina remained unstable. The South American nation’s peso tumbled anew amid rising concern the nation will default on its debt, while Hong Kong equities slumped after its airport canceled flights for a second day as protesters clashed with police.

Here are some key events coming up:

  • Companies releasing results include China’s JD.com, Tencent and Alibaba; Cisco, Walmart and Nvidia of the U.S.; the U.K.’s Prudential; Australia’s Telstra; Europe’s Swisscom and brewer Carlsberg.
  • Wednesday brings data on China retail sales, industrial production and the jobless rate.
  • Thursday sees the release of U.S. jobless claims, industrial production and retail sales data.

These are the main moves in markets:

Stocks

  • The S&P 500 Index rose 1.4 per cent as of 4 p.m. New York time.
  • The Dow Jones Industrial Average rose 1.2 per cent.
  • Nasdaq Composite Index gained 2 per cent, while the Nasdaq 100 Index rose 2.2 per cent.
  • The Stoxx Europe 600 Index rose 0.5 per cent.
  • The MSCI Asia Pacific Index decreased 1.4 per cent.
  • The MSCI Emerging Market Index decreased 0.3 per cent.

Currencies

  • The Bloomberg Dollar Spot Index advanced 0.2 per cent.
  • The euro fell 0.4 per cent at US$1.1174.
  • The British pound slipped 0.2 per cent at US$1.2057.
  • The Japanese yen fell 1.3 per cent to 106.678.
  • The Argentine peso slumped 4.8 per cent to 55.55 per dollar.

Bonds

  • The yield on 10-year Treasuries rose four basis points to 1.68 per cent.
  • The two-year rate rose eight basis points to 1.66 per cent.
  • Germany’s 10-year yield fell two basis points to -0.609 per cent.

Commodities

  • Gold futures fell 0.1 per cent to US$1,515 an ounce.
  • West Texas Intermediate crude rose 3.8 per cent to US$57.04 a barrel.