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GLOBAL MARKETS-Trade hopes lift dollar, crude; doubts slow stock rally

Published 06/11/2019, 08:36 am
Updated 06/11/2019, 08:42 am
© Reuters.  GLOBAL MARKETS-Trade hopes lift dollar, crude; doubts slow stock rally
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(New throughout, updates prices, market activity and comments to close of U.S. markets)

* China push to remove recent U.S. tariffs seen as positive

* Dow, Nasdaq close at new record highs; MSCI index pauses

* Bond yields rising globally as recession fears recede

* Oil prices gain on trade optimism, economic data

By Herbert Lash

NEW YORK, Nov 5 (Reuters) - The U.S. dollar and crude prices rose on Tuesday, spurred by optimism that a U.S.-China trade deal may be near, but a rally in global equity markets paused after China pressed U.S. President Donald Trump to remove recently imposed tariffs.

MSCI's gauge of global stock markets set a 21-month intraday high but pared gains to close lower while the Nasdaq and Dow Jones industrial average eked out record closing highs.

U.S. and European government bond yields climbed on trade hopes and upbeat economic data. China's push to remove more U.S. tariffs imposed in September as part of a "phase one" trade deal mostly boosted optimism.

"You're seeing a continuation of optimism around a potential trade agreement to come with China as referenced by the potential removal of tariffs in December," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. "It's just another leg towards a potential agreement."

A trade deal is far from certain, Fawad Razaqzada, technical analyst at FOREX.com, said in an investor note. "If the talks collapse, then so too could the markets," he said.

Solid corporate earnings and upbeat data gave equities a lift. More than three-quarters of the S&P 500 companies that have reported so far have beaten profit expectations, Refinitiv data showed.

ISM's services data showed a reading of 54.7 in October from 52.6 the prior month, exceeding expectations of economists polled by Reuters for 53.4. It was the latest data to ease concerns the U.S. economy.

MSCI's gauge of stock indexes in 47 countries .MIWD00000PUS edged lower by 0.01%. The pan-European STOXX 600 index of small, mid-sized and large stocks .STOXX and the FTSEurofirst 300 index .FTEU3 of leading regional shares both rose 0.2%.

On Wall Street, the Dow Jones Industrial Average .DJI rose 30.52 points, or 0.11%, to 27,492.63. The S&P 500 .SPX lost 3.65 points, or 0.12%, to 3,074.62 and the Nasdaq Composite .IXIC added 1.48 points, or 0.02%, to 8,434.68.

In Asia, optimism was fueled by the People's Bank of China's first cut in its medium-term lending rate since early 2016. It was only a token 5 basis points to 3.25%, but it underscored Beijing's desire to support the economy.

Oil prices rose more than 1% on trade hopes. O/R Oil was also supported when OPEC Secretary-General Mohammad Barkindo said the market outlook for 2020 may be brighter than forecast, appearing to downplay any need for deeper production cuts. crude LCOc1 futures for January delivery settled 83 cents higher at $62.96 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 69 cents to settle at $57.23 a barrel.

The safe-haven yen and Swiss franc slid. Gold fell almost 2%, en route to its biggest daily slide in over a month. GOL/

The dollar index .DXY rose 0.43%, with the euro EUR= down 0.48% to $1.1073. The Japanese yen JPY= weakened 0.52% versus the greenback at 109.16 per dollar.

U.S. gold futures GCcv1 settled down 1.8% at $1,483.70.

Benchmark 10-year U.S. Treasury notes US10YT=RR fell 19/32 in price to yield 1.8548%. That boosted financial stocks. The S&P financial sector .SPSY was the second-biggest gainer of the 11 sectors, edged out by the rising energy sector .SPNY .

A steady rise in bond yields has been a big tailwind for financial stocks and one of the biggest contributors to the continued strength in equities, James said.

"Outside some significant macroeconomic downside shock, the market continues to reluctantly trade higher," he said.

The 10-year U.S. Treasury barely yielded 1.5% in early October.

Germany's 10-year bond yield rose as high as -0.308% DE10YT=RR , while the French 10-year hit -0.006% FR10YT=RR to within striking distance of positive territory.

https://tmsnrt.rs/2JMLMjB World stocks surge $10 in 2019

https://tmsnrt.rs/2JRIM5J

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