US stocks surged and the dollar strengthened against most major peers and as the Trump Administration sought to deescalate a trade rift with China. Treasury yields climbed as havens such as the yen and gold tumbled.
Strength in technology companies led all major equity gauges higher. The greenback rose after Treasury Secretary Steven Mnuchin said on Sunday that the US was “putting the trade war on hold,” amid progress in talks with China. West Texas crude reached the highest level since 2014.
The euro headed for a sixth day of declines after Italy’s two populist parties closed in on a pick for prime minister, while Italian bonds extended their decline. Media companies and retailers led advances in the Stoxx Europe 600 Index, though a number of countries are out for a holiday.
“The latest agreement suggests that in the end logic will prevail between the US and China,” said Athanasios Vamvakidis, global head of G10 FX strategy at Bank of America Merrill Lynch, in a televised interview. “This is good news for the dollar,” he stated.
The easing protectionist tensions will offer some respite to traders as they grapple with the impact of rising US interest rates and a stronger dollar. However, the week ahead is loaded with risk events, including releases of the latest meeting minutes from both the Federal Reserve and European Central Bank, a slew of debt sales from the US and preliminary purchasing manager indexes from the euro zone.
Meanwhile, geopolitical stress lingers, with South Korea President Moon Jae-in visiting Washington to discuss North Korea and Brexit negotiations.
Elsewhere, emerging-market currencies continued to come under pressure, with Turkey’s lira falling around 2%.
The S&P 500 was up 0.8% to 2,734.95 as of 9:40 PM (EST). The Stoxx Europe 600 Index rose 0.3% to the highest since January. The MSCI All-Country World Index gained 0.5%. The UK’s FTSE 100 Index increased 0.8% to the highest on record.
The Bloomberg Dollar Spot Index changed little, holding around the highest level since December. The euro was up less than 0.1% to $1.1777, reversing five straight declines. The British pound decreased 0.3% to $1.3433, the weakest in almost 21 weeks. South Africa’s rand dipped 0.1% to 12.7812 per dollar, the lowest in about five months.
The yield on 10-year Treasuries climbed two basis points to 3.08%. Britain’s 10-year yield declined one basis point to 1.5%, the lowest in a week. Germany’s 10-year yield fell two basis points to 0.56%, the lowest in more than a week.
West Texas Intermediate crude gained 0.4% to $71.58 a barrel. Gold fell 0.3% to $1,289.27 an ounce, the weakest in almost 21 weeks. Copper rose 1.3% to 3.09 per pound, the highest in more than a week.
These are some key events to watch this week:
— Brexit negotiations resume in Brussels on Tuesday — South Korean President visits Washington to discuss North Korea on Tuesday — The European Parliament will question Facebook Chairman and CEO Mark Zuckerberg on his company’s use of personal data on Tuesday — The Federal Reservereleases minutes of the central bank’s May 1-2 meeting on Wednesday — Euro-area and Japan PMIs will be released on Wednesday — Thursday sees the Bank of England Markets Forum at Bloomberg London; speakers include BOE Governor Mark Carney and New York Fed President William Dudley — At the St. Petersburg Forum on Friday, Presidents Putin and Emmanuel Macron, IMF Managing Director Christine Lagarde, and Japanese Prime Minister Shinzo Abe participate on a panel moderated by Bloomberg News editor-in-chief John Micklethwait — European Union finance ministers discuss the latest on Brexit talks in Brussels on Friday Source: Bloomberg