US stocks rose within striking distance of records amid optimism economic growth can continue apace even as the world’s two largest economies square off in a trade skirmish. The dollar slid the most in two weeks.
The S&P 500 Index hit the highest level since January 29 and the Cboe Volatility Index dipped below 11 for the first time since May. Miners lifted the Stoxx Europe 600 Index as commodities advanced. Chinese stocks led a broad rally in Asia, with the Shanghai Composite Index posting its biggest gain in two years on hopes for more policy support for investment.
The gains in emerging-market equities overshadowed rising woes in Turkey, where the yield on the country’s 10-year bonds touched a record high amid a diplomatic spat with the US.
As earnings season enters its final phase, most major US companies have now reported and about four out of five have surprised to the upside. That’s pushed the S&P 500 within 25 points of a record, even as investors fret over the escalating trade war between America and China. Meanwhile, geopolitical concerns linger in the background, including confusion about the status of negotiations intended to lead to the denuclearisation of the Korean peninsula and the Trump administration’s restoration of some US sanctions on Iran.
Elsewhere, crude climbed after Saudi Arabian production cuts added to concern about tightening worldwide supplies. Gold advanced with industrial metals. European sovereign bonds were mostly lower, with Italian notes rising.
The yen strengthened after Reuters reported that the Bank of Japan had considered raising interest rates this year. Germany’s industrial production fell more than expected in June, but the euro strengthened after a recent run of losses.
Earnings season includes results from: Japan Post Bank, Disney, 21st Century Fox, Deutsche Telekom, China Mobile, Glencore and Adidas. The Bank of Japan releases a summary of opinions on Wednesday from its July 30-31 meeting, at which it tweaked elements of its stimulus policy to make it more sustainable. US consumer prices probably rose in July, consistent with a pickup in inflation that’s projected to keep the Federal Reserve on a path of gradual interest-rate increases.
The S&P 500 rose 0.2 percent to 2,856 in New York. The Stoxx Europe 600 Index climbed 0.6 percent to the highest in a week. The MSCI All-Country World Index increased 0.4 percent to the highest in more than 20 weeks on the biggest climb in almost two weeks. The MSCI Emerging Market Index jumped 0.8 percent. The Bloomberg Dollar Spot Index dipped 0.3 percent, the largest decrease in almost two weeks. The euro increased 0.4 percent to $1.1598.
The yield on 10-year Treasuries climbed one basis point to 2.95 percent.