World stocks rose on Wednesday, hitting a four-month high on hopes for progress in trade talks between the United States and China, and a supportive backdrop from major central banks also helped push risk assets higher.
Crude prices rose to 2019 highs helped by output cuts from top producers as well as U.S. sanctions on OPEC members Iran and Venezuela.
Stocks started with a rally in Asia that pushed the MSCI world equity index to its highest since October after U.S. President Donald Trump said negotiations with China were going well and suggested he was open to extending the deadline to complete them beyond March 1.
Many had feared U.S. tariffs on $200 billion worth of Chinese imports would rise to 25 per cent from 10 per cent if no deal was reached by then.
European stock indexes also strengthened, with a region-wide index at a four-month high.
Gains in material companies pulled higher Canada’s main stock index on Wednesday, as gold prices rose on hopes of a trade deal between the United States and China.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 93.80 points, or 0.59 per cent, at 16,031.24.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 0.95 per cent as gold futures rose..
Teck Resources Ltd. jumped 5 per cent, while First Quantum Minerals Ltd. was up 3.2 per cent. Goldcorp Inc. and Methanex Corp. closed up 2.2 per cent and 2 per cent, respectively.
Barrick Gold rose 1.3 per cent after the miner outlined a plan to settle disputes between its Acacia Mining unit and Tanzania’s government.
Financial stocks jumped 0.9 per cent, led by a 3.7-per-cent rise in Fairfax Financial Holdings Inc. and 3.2-per-cent increase in Home Capital Group Inc. Laurentian Bank of Canada was up 2.1 per cent, while Manulife Financial finished 2 per cent higher.
Two of the index’s 11 major sectors were lower, including a 0.2-per-cent decline in the health care sector.
On Wall Street, stocks wobbled after Federal Reserve policymakers gave little sense of how long their “patient” stance on U.S. interest rate policy would last in minutes from their latest meeting, while promising “before too long” a plan for their $4 trillion balance sheet.
The tone of the Fed meeting “was decidedly noncommittal, and the minutes recreated this noncommittal message in more detail,” said Jefferies analysts led by Ward McCarthy in a note.
“The FOMC is on track to curtail the normalization of the balance sheet without providing any solid reasoning for doing so.”
The Dow Jones Industrial Average rose 63.12 points, or 0.24 per cent, to 25,954.44, the S&P 500 gained 4.94 points, or 0.18 per cent, to 2,784.7, and the Nasdaq Composite added 2.30 points, or 0.03 per cent, to 7,489.07.
The pan-European STOXX 600 index rose 0.67 per cent and MSCI’s gauge of stocks across the globe gained 0.50 per cent.
Emerging market stocks rose 1.24 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.2 per cent higher, while Japan’s Nikkei rose 0.60 per cent. Hong Kong’s Hang Seng gained 1 per cent to close at its highest since August.
While hopes for a trade deal between the world’s two largest economies are seen as the primary driver for world stocks, dovish central bank messages from the United States to Asia and the ECB are also playing a part.
On currency markets, the dollar index fell 0.06 per cent, with the euro up 0.06 per cent to $1.1347 while sterling was last trading at $1.3059, down 0.02 per cent on the day.
The Japanese yen weakened 0.13 per cent versus the greenback at 110.79 per dollar after Japan recorded its biggest annual drop in exports in January for more than two years, and on recent dovish Bank of Japan signals.
The offshore yuan rose 0.5 per cent against the dollar to a three-week high of 6.7067.
U.S. oil prices rose above $57 per barrel for the first time in three months supported by OPEC-led supply cuts and U.S. sanctions on Iran and Venezuela, but soaring U.S. production and expectations of an economic slowdown kept the market wobbly.
U.S. crude rose 1.43 per cent to $57.26 per barrel and Brent was last at $67.11, up 0.99 per cent.
U.S. Treasury yields were little changed after the Fed minutes showed committee members were undecided on whether to hike rates again this year.
Benchmark 10-year notes last fell 1/32 in price to yield 2.6483 per cent, from 2.645 per cent late on Tuesday.
The 30-year bond last fell 5/32 in price to yield 2.9952 per cent, from 2.988 per cent late on Tuesday.