European stocks climbed to a one-week high and US futures rose as investors focused on US-China trade discussions and American lawmakers making progress on an economic aid package.
The Stoxx Europe 600 Index posted broad-based gains, with travel companies, commodity producers and retailers leading the charge. Bank of Ireland Group Plc rallied as the lender’s chief executive officer suggested the economy is proving more resilient than expected. BMW AG slid 2.5% after the German carmaker reported its first loss since 2009.
Gold continued its ascent above a record $2,000 an ounce as investors considered the effects of more government stimulus. The dollar weakened against all of it major peers. Ten-year Treasury yields edged up, but are still near the lowest since March.
Pressure is growing on Republicans and Democrats to resolve differences over a new US virus relief package. Treasury Secretary Steven Mnuchin said the goal is to strike a deal on legislation by the end of the week.
“Hopes of a fiscal package will indeed be instrumental in any improvement in risk sentiment,” said Padhraic Garvey, head of Americas research at ING Financial Markets.
Meanwhile, America and China plan to assess their trade agreement in mid-August against a backdrop of rising bilateral tension, according to people briefed on the matter. China’s yuan strengthened to its highest level since March 11.
European economic data was positive, with a euro zone composite purchasing managers’ index climbing to 54.9, the highest level in just over two years and above a flash estimate. Orders increased for the first time in five months. Companies made further cuts to their workforce last month, according to IHS Markit, casting uncertainty over how sustainable the region’s upturn will be.
Lebanon’s bonds, which are the subject of a planned debt restructuring, advanced, erasing declines following the deadly blast in Beirut on Tuesday. The stock market was closed.
“The events could motivate the political parties to set aside their differences and make efforts to break the deadlock and begin to fix the economy, negotiate with the IMF, bondholders, regional governments and the like,” said Richard Segal, a senior analyst at Manulife Investment Management in London.
Reserve Bank of India and Bank of England are expected to take decisions on interest rates on Thursday.
Futures on the S&P 500 Index climbed 0.5% as of 9:21 am London time, the Stoxx Europe 600 Index gained 0.7%.
The MSCI Asia Pacific Index increased 0.5% and the MSCI Emerging Market Index has advanced 0.9%.
While the Bloomberg Dollar Spot Index sank 0.2%, the euro gained 0.1% to $1.1813 and the British pound was little changed at $1.3074. While the Japanese yen was little changed at 105.76 per dollar, the offshore yuan strengthened 0.3% to 6.9535 per dollar.
The yield on 10-year Treasuries advanced two basis points to 0.52% and the yield on two-year Treasuries climbed less than one basis point to 0.11%. Germany’s 10-year yield gained one basis point to -0.54%.
Britain’s 10-year yield gained two basis points to 0.093% and Japan’s 10-year yield dipped one basis point to 0.012%.
While West Texas Intermediate crude gained 1.4% to $42.11 a barrel, brent crude gained 1.1% to $44.86 a barrel and gold strengthened 0.7% to $2,032.82 an ounce.