US equities rallied with European stocks on optimism about the prospects for success in American-Chinese trade talks.
Tech shares and automakers led the S&P 500 Index higher after China was said to move towards cutting tariffs on US-made cars. The Stoxx Europe 600 Index surged the most in eight months. The dollar was steady while Treasuries and core European bonds slipped. Oil jumped past $52 a barrel on speculation production cuts will re-balance the market.
US stocks have been whipsawed in recent weeks as traders searched Donald Trump’s tweets for clues about the outlook for trade talks, tried to decide if a stock selloff could prompt the Federal Reserve to pare back rate increases and evaluated economic data that signaled a slowdown may be coming. Monday’s session saw the S&P 500 Index’s biggest full reversal since February 6 as it erased a 1.9 percent decline and ended 0.2 percent higher.
“Markets are highly volatile,” hedge-fund pioneer Paul Tudor Jones said.
The news on car tariffs followed reports that Chinese Vice Premier Liu He discussed a timetable for trade talks with Treasury Secretary Steven Mnuchin, which also helped to bolster sentiment.
Yet investors also have an eye on the continuing flap over Canada’s arrest of the chief financial officer of Huawei Technologies Co. And among a plethora of political risks, the UK is struggling to put its Brexit deal back on track and fears linger over the possibility a French protest movement could escalate further.
Elsewhere, India’s assets saw a choppy session, with stocks initially roiled by a surprise resignation of the central bank governor on Monday, before posting a recovery as traders mulled the implications for Prime Minister Narendra Modi of regional election results. Emerging-market currencies and shares climbed along with oil and metals.
The European Central Bank is set to cap asset purchases at its final policy meeting of 2018 on Thursday.
The Stoxx Europe 600 Index surged 1.9 percent in New York, the largest jump in about eight months. Futures on the S&P 500 Index rose 0.9 percent. The MSCI All-Country World Index climbed 0.4 percent, the first advance in more than a week. The MSCI Emerging Market Index rose 0.4 percent, the biggest advance in a week.
The Bloomberg Dollar Spot Index fell 0.2 percent. The euro gained 0.2 percent to $1.1381, the strongest in more than a week. The Japanese yen increased 0.2 percent to 113.14 per dollar. The British pound increased 0.4 percent to $1.2608, the biggest increase in almost two weeks. The MSCI Emerging Markets Currency Index climbed 0.1 percent.
The yield on 10-year Treasuries jumped two basis points to 2.87 percent, the biggest surge in five weeks. Germany’s 10-year yield increased one basis point to 0.25 percent. Britain’s 10-year yield rose two basis points to 1.216 percent.
The spread of Italy’s 10-year bonds over Germany’s climbed less than one basis point to 2.8624 percentage points.