US stocks rallied to optimism in China: markets buckle

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US equities rose alongside European equities, while Asian equities declined after China announced it would not react immediately against the latest US rate hike. Treasury stocks edged down, while the dollar gauge held steady at a nine-month high.

The S & P 500 index rose on Thursday after a spokesman for the Chinese Ministry of Commerce said the escalation of the trade war would not benefit any of the parties and that it was more important to discuss the removal additional rights. Equities across Asia reduced their decline, while the Stoxx Europe 600 index rose.

Market sentiment remains delicate after President Donald Trump's recent statements on trade and investors are trying to maintain optimism for a resolution. US economic growth slowed in the second quarter more than originally announced, with lower values ​​for categories including exports and inventories offsetting higher spending by consumers.

"Positive trade news is driving investors back into some equity markets and taking a bit more risk," said Chris Gaffney, President of Global Markets at TIAA. "The number of GDP – although there has been a slight decline in second-quarter estimates, consumers still look strong. This is the key. The earnings component was very good – corporate earnings look robust. "

In the meantime, the bond rally ran out of steam after the 30-year US Treasury yield hit a record low of 1.90% on Wednesday. Treasury Secretary Steven Mnuchin said the issuance of very long bonds in the United States was "seriously under consideration", which could be an initiative that would mark a historic overhaul of the treasury bill market, a worth $ 16 trillion. Gold rose slightly, while West Texas crude stood at about $ 56 per barrel.

The Chinese yuan has been strengthened for the first time in 11 sessions. In Europe, Italy's bonds jumped and its shares outperformed as the country headed for the formation of a new government. The pound sterling declined against the growing risk of a Brexit no way out.

Events to watch this week:

• The policy decision and the briefing of the Bank of Korea take place on Friday.
• Euro-zone CPI data for August are also expected on Friday.

Here are the main movements on the markets:

stocks

• The S & P 500 index rose 1% at 10:33 am New York time.
• The Stoxx Europe 600 index rose 1% to a record level in four weeks.
• The UK FTSE 100 Index rose 1%.
• The MSCI Emerging Market index rose 0.4%.

Coins

• The Bloomberg Dollar Spot index gained 0.1%.
• The euro fell 0.1% to 1.1062 dollar.
• The pound fell 0.1% to $ 1.2196.
• The Japanese yen fell 0.2% to 106.38 to the dollar.

Obligations

• The yield on 10-year Treasuries rose two basis points to 1.50%.
• The yield on two-year Treasury bonds rose two basis points to 1.52%.
• Germany's 10-year yield rose by one basis point to -0.70%.
• The 10-year British yield rose less than one basis point to 0.444%.

Basic products

• West Texas Intermediate crude rose 0.7% to $ 56.19 per barrel.
• Gold rose 0.2% to $ 1,541.44 an ounce.

– With the help of Min Jeong Lee and Andreea Papuc.

To contact the reporters on this story: Yakob Peterseil in London at [email protected] Vildana Hajric in New York at [email protected]

To contact the editors in charge of this story: Christopher Anstey at [email protected], Jeremy Herron at [email protected], Andrew Dunn, Todd White

© 2019 Bloomberg L.P.