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GLOBAL MARKETS-Stock rally stalls ahead of U.S.-China trade deal, oil gains

Published 15/01/2020, 03:42 am
© Reuters.  GLOBAL MARKETS-Stock rally stalls ahead of U.S.-China trade deal, oil gains
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* Equities trade little changed ahead of deal signing

* Oil gains as trade accord seen helping growth

* Dollar edges slight higher, yen falls

By Herbert Lash

NEW YORK, Jan 14 (Reuters) - Equity markets traded little changed globally on Tuesday as investors awaited the signing of the China-U.S. trade deal, while oil prices rose on hopes the agreement will help revive the world's sluggish economy.

Gold prices slid as the planned signing Wednesday of the Phase 1 trade deal dampened the appeal of safe-haven bullion and the Japanese yen, which dropped to eight-month lows.

MSCI's all-country world index and shares on Wall Street backed off fresh records reached on Monday as investors said the long-awaited trade deal has been priced into the market.

China has pledged to buy almost $80 billion of additional manufactured goods from the United States over the next two years as part of a trade war truce, a source told Reuters on Monday. would also buy over $50 billion more in energy supplies and boost purchases of U.S. services by about $35 billion over the same two-year period, the source said.

The deal is a step in the right direction and once the rhetoric is backed with action, further progress may be made as these negotiations continue, said Jim Paulsen, chief investment strategist at Leuthold Group in Minneapolis.

"However, I find a radical shift in Chinese spending unlikely. I have low expectations for meeting stated goals," Paulsen said.

Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, said reports of additional purchases "was incrementally positive."

"The fact that the China thing is not getting worse and we have an agreement is lessening one of the things that could go wrong in 2020," Tuz said.

MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.04%, while the pan-European STOXX 600 index .STOXX rose 0.22%.

On Wall Street, the Dow Jones Industrial Average .DJI rose 92.09 points, or 0.32%, to 28,999.14. The S&P 500 .SPX lost 2.26 points, or 0.07%, to 3,285.87 and the Nasdaq Composite .IXIC dropped 13.28 points, or 0.14%, to 9,260.65.

Overnight in Asia, Japan's Nikkei .N225 added 0.7% to hit its highest level in a month. Australian shares rose by the same margin to close at a record .AXJO .

Hong Kong's Hang Seng .HSI and Shanghai blue chips .CSI300 also hit multi-month peaks before running out of steam.

China's yuan was slightly weaker after earlier hitting a high last seen in July. The U.S. Treasury Department on Monday reversed its designation of China as a currency manipulator in what is seen as a conciliatory gesture before the trade deal is signed. dollar index .DXY rose 0.08%, with the euro EUR= down 0.08% to $1.1124. The yen JPY= weakened 0.12% versus the greenback to 110.08 per dollar.

Global oil benchmark Brent crude rose as the trade deal marks a major step in ending a dispute that has cut global growth and dented crude demand.

The trade dispute has had a tangible impact on global oil demand growth last year, said Tamas Varga, an analyst at broker PVM. Varga pointed to 2019 demand growth of 890,000 barrels per day (bpd), compared with initial forecasts of 1.5 million bpd.

Brent crude LCOc1 gained 38 cents to $64.58 a barrel and West Texas Intermediate crude futures CLc1 rose 19 cents to $58.27 a barrel.

U.S. consumer prices rose slightly in December even as households paid more for healthcare, and monthly underlying inflation slowed, supporting the Federal Reserve's desire to keep interest rates unchanged at least through this year.

The weak inflation report from the Labor Department on Tuesday came on the heels of data last week showing a moderation in job growth in December. Economists said these developments were flagging a sharp slowdown in domestic demand. 10-year notes US10YT=RR last rose 7/32 in price to yield 1.8231%.

As White House plans US-China Phase 1 ceremony, still no final deal text

China Dec yuan-denominated exports up 9%, imports up 17.7%

USTR Lighthizer says nearly done with translation of China trade deal

PREVIEW-As businesses hold back, U.S. consumers seen boosting big banks' profits

Global $12 trillion stocks market rally

https://tmsnrt.rs/2tfURfX

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