US stocks rose slightly as investors weighed their risk tolerance amid the resumption of trade talks with China. The dollar fell to its lowest level since October as traders assessed seemingly dovish remarks from Federal Reserve chairman Jerome Powell on Friday.
The S&P 500 Index gained led by consumer discretionary stocks and energy as oil surged higher. The Nasdaq benchmarks climbed on strength in telecommunications services and semiconductor shares. The Dow Jones Industrial Average was the only major US gauge in the red. The S&P 500 added 1.6 percent after dropping 9 percent in December. The Stoxx Europe 600 Index retreated for the third time in four sessions.
Investors are still struggling to pick a direction after the wild ending to 2018. Powell’s soothing comments on Friday and China’s moves to shore up its economy lifted sentiment somewhat, but risks loom large. And US lawmakers are still unable to reach agreement on a budget, leaving the federal government shut down for a third week.
Fresh trade talks between the US and China helped sap demand for the greenback, while the pound slipped against the euro as UK lawmakers sought to avoid a no-deal Brexit. The common currency remained solidly up even as data showed German factory orders fell more than expected in November.
Elsewhere, emerging-market shares jumped, and the Indonesian rupiah led gains in major currencies. West Texas Intermediate crude extended a rebound to trade above $49 a barrel. Gold climbed after China reported increased holdings.
A US delegation is in Beijing for trade talks with Chinese officials, the first face-to-face encounter since Trump and Xi agreed to a temporary truce on December 1. Wednesday sees the release of minutes from the Fed’s December 18-19 policy meeting. Powell will speak to the Economic Club of Washington on Thursday. UK Parliament resumes a debate on the Brexit withdrawal bill, with PM Theresa May seeking to avoid defeat in a vote set for the week of January 14.
Futures on the S&P 500 Index decreased 0.1 percent as in New York. The Stoxx Europe 600 Index dipped 0.4 percent. The MSCI All-Country World Index gained 0.4 percent to the highest in three weeks. The MSCI Emerging Market Index advanced 1.3 percent to the highest in more than three weeks.
The Bloomberg Dollar Spot Index declined 0.3 percent to the lowest in almost 12 weeks.
The euro gained 0.5 percent to $1.1448, the biggest gain in more than a week. The Japanese yen climbed 0.2 percent to 108.29 per dollar. The British pound increased 0.3 percent to $1.276, the strongest in more than a month. The MSCI Emerging Markets Currency Index advanced 0.4 percent to the highest in six months.
The yield on 10-year Treasuries declined three basis points to 2.64 percent. Germany’s 10-year yield decreased less than one basis point to 0.20 percent. Britain’s 10-year yield fell four basis points to 1.237 percent. The spread of Italy’s 10-year bonds over Germany’s increased two basis points to 2.7152 percentage points to the widest in almost four weeks.
The Bloomberg Commodity Index gained 0.5 percent to the highest in more than two weeks. West Texas Intermediate crude advanced 2.2 percent to $49.00 a barrel, hitting the highest in three weeks with its sixth consecutive advance.