U.S. stocks rallied Monday after optimistic remarks from French and U.S. leaders about developments in the Sino-American trade war. The dollar strengthened and 10-year Treasury yields held close to a three-year low.

All three main U.S. equity indexes climbed in thin trading after President Donald Trump said prospects for a trade deal were better now than at any time since talks began last year, while French President Emmanuel Macron said things were moving forward between the U.S. and China. The broad-based equity rally was led by tech shares, especially semiconductor stocks.

“They want to make a deal very badly,” Trump said of the Chinese as he and Macron addressed reporters at the end of the Group of 7 meetings in France. Trump also said he’s not looking into auto tariffs for Japan right now.

The trade war’s latest twists and turns punctuated an already tumultuous August, with markets buffeted by signs of slowing global economic growth and violent protests in Hong Kong. Regardless of Monday’s developments, the risk of recession may have crept higher as protectionism escalated Friday, when Trump announced fresh levies on Chinese imports and called for American companies to pull out of Asia’s largest economy after China said it would impose retaliatory tariffs on U.S. goods.

“In the short term, it’s definitely difficult to navigate the trading environment,” Candice Bangsund, portfolio manager of global asset allocation at Fiera Capital, said in an interview at Bloomberg’s New York headquarters. “It’s a case of near-term fear, elevated volatility, very fragile investor sentiment. Investors are watching the headlines and trading on the headlines and that’s obviously created even more volatility in the marketplace.”

The Euro Stoxx 50 Index gained after Trump’s China comments. The euro slipped as German business confidence fell to the lowest in almost seven years. Asia stocks fell broadly, led by Hong Kong, in trading that had mostly closed before Trump’s remarks. The onshore yuan weakened for an eighth straight session. Britain’s markets were closed for a holiday.

Elsewhere, oil futures gave up earlier gains as traders digested the latest news on tariffs. The yen gave back some of its 1 per cent increase from the previous session.

Here are the main moves in markets:

Stocks

The S&P 500 Index increased 0.9 per cent as of 12:57 p.m. New York time.
The Dow Jones Industrial Average rose 1 per cent
Europe’s Stoxx 50 Index gained 0.4 per cent.
Germany’s DAX Index increased 0.4 per cent.
The MSCI emerging Market Index sank 1.2 per cent to near an eight-month low.

Currencies

The Bloomberg Dollar Spot Index rose 0.2 per cent.
The euro declined 0.3 per cent to US$1.1111.
The Japanese yen weakened 0.7 per cent to 106.08 per dollar, the biggest drop in almost two weeks.

Bonds

The yield on 10-year Treasuries fell less than one basis point to 1.53 per cent, the lowest in more than a week.
The yield on two-year Treasuries rose one basis point to 1.54 per cent.
Germany’s 10-year yield climbed one basis point to -0.67 per cent.

Commodities

Gold climbed 0.2 per cent to US$1,529.52 an ounce.
West Texas Intermediate crude fell 0.8 per cent to US$53.74 a barrel, a two-week low.