Oil prices and a gauge of global stock markets edged higher on Tuesday, lifted by fresh record highs on Wall Street after U.S. President Donald Trump said the United States and China were close to agreeing on the first phase of a trade deal.
Investor sentiment took heart in a steady patter of encouraging news about the prolonged trade talks, providing hope the on-again, off-again talks after 16 months of negotiations were finally drawing near to conclusion.
Trump said Washington was in the “final throes” of work on a deal that would defuse the trade war with Beijing, but he also underscored Washington’s support for protesters in Hong Kong, a potential sore point with China.
China’s Commerce Ministry earlier said Chinese and U.S. trade negotiators held a phone call to hammer out a “phase one” deal, leading U.S. and euro zone bond yields to slide as investors saw progress being made.
MSCI’s gauge of stocks across the globe gained 0.09 per cent, as the global benchmark traded within 1 percentage point of an all-time high set in January 2018.
Equity markets have rallied on hopes of a deal but traders are looking for what the reaction might be once a deal is reached, said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas.
“Traders are starting to book some profits and just get cautious. Cautious optimism is driving us higher right now,” he said.
Despite a decline in the heavyweight energy and financial sectors, Canada’s main stock index recovered from early losses to finish flat on Tuesday.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 3.02 points, or 0.02 per cent, at 17,035.88.
Seven of the index’s 11 major sectors were lower.
The energy sector dropped 1.3 per cent, while the heavyweight financials sector was down 0.4 per cent.
Shares of Bank of Nova Scotia slipped 0.8 per cent after Canada’s third-biggest lender posted a rise in quarterly profit, slightly exceeding expectations as loan and deposit growth and international earnings offset falling margins and higher credit provisions.
Materials stocks finished 0.7 per cent higher as gold prices increased, while tech stocks jumped 2.2 per cent.
Leading the index were Silvercorp Metals Inc., up 6.6 per cent, Alacer Gold Corp., up 6 per cent, and MAG Silver Corp., higher by 5.4 per cent.
Lagging shares were Hexo Corp., down 8.5 per cent, Ivanhoe Mines Ltd., down 4.9 per cent, and Secure Energy Services Inc., lower by 4.5 per cent.
The pan-European STOXX 600 index closed up 0.1 per cent with the French CAC 40 up 0.08 per cent and Germany’s DAX closing down by 0.08 per cent.
MSCI’s emerging markets index fell 0.52 per cent.
All three major indexes on Wall Street set record highs, as gains for Disney and Best Buy overshadowed some softer-than-anticipated economic data.
The Dow Jones Industrial Average rose 53.78 points, or 0.19 per cent, to 28,120.25, the S&P 500 gained 6.73 points, or 0.21 per cent, to 3,140.37 and the Nasdaq Composite added 15.45 points, or 0.18 per cent, to 8,647.93
Oil prices traded higher, helped by predictions for a draw on U.S. crude stockpiles.
“The positive effect this is having on the oil price is more psychological in nature,” said Commerzbank analyst Carsten Fritsch. He noted that he does not expect oil demand to pick up noticeably even after any partial agreement is signed.
U.S. crude stockpiles were expected to have declined 300,000 barrels last week, according to a Reuters poll of analysts, ahead of reports from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday.
Brent crude futures settled up 62 9 cents at $64.27 a barrel, while West Texas Intermediate crude rose 40 cents to settle at $58.41 a barrel.
The U.S. dollar traded little changed.
Data showed the U.S. goods trade deficit fell sharply in October as both exports and imports declined, pointing to a continued reduction in trade flows that has been blamed on the Trump administration’s “America First” policy.
U.S. consumer confidence fell for a fourth straight month in November while other data showed an unexpected drop in new home sales last month.
The dollar index fell 0.08 per cent, with the euro up 0.07 per cent to $1.1021. The Japanese yen weakened 0.10 per cent versus the greenback at 109.04 per dollar.
Benchmark 10-year U.S. Treasury notes last rose 7/32 in price to push their yield down to 1.7380 per cent.
Gold edged higher, snapping a four-day losing streak, after touching a two-week low earlier in the session at $1,450.30 an ounce.
U.S. gold futures for December delivery settled up 0.2 per cent at $1,460.30.
“The only story here is the China-U.S. (trade deal). Last few sessions, gold has been selling off on hopes for a U.S.-China deal. Right now, gold is paused here and is in kind of a wait-and-see (mode),” said Bob Haberkorn, senior market strategist at RJO Futures.