Stocks rose on Thursday after U.S. President Donald Trump said he would meet with China’s top trade negotiator on Friday, while oil rose as OPEC pledged a decision on supply at its December meeting.
A drop in the U.S. currency, also tied to trade talks, supported dollar-denominated commodity prices, while sterling jumped just under 2 per cent, on track for its largest gain against the dollar in seven months, after the British and Irish prime ministers said they would continue discussions to try and agree on a Brexit deal.
Markets were expected to remain volatile, with the focus on the China-U.S. trade talks, as wild overnight gyrations indicated traders were ready to chase every headline.
Canada’s main stock index gained ground on Thursday, as a clutch of positive headlines on trade lifted sentiment.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 42.81 points, or 0.26 per cent, at 16,422.68.
The energy sector climbed 1.1 per cent, while financial and industrial stocks rose 0.3 per cent and 0.7 per cent, respectively.
A weak spot in markets was Hexo Corp., which plummeted 23 per cent, as the cannabis producer withdrew its 2020 forecast, blaming an uncertain environment and slow store rollouts.
That pushed the healthcare sector down 6.1 per cent, and pressured other pot companies, including Aphria Inc., Aurora Cannabis Inc. and Canopy Growth Corp., which were down between 9.3 per cent and 13.6 per cent.
The euro hit its highest since Sept. 20 versus the dollar as the greenback turned weaker across the board, partly due to a Bloomberg report about a U.S.-China currency pact to stop the yuan’s devaluation. China’s offshore yuan hit its strongest levels in more than two weeks.
The risk-on environment weighed on the greenback, and even harder on Japan’s yen.
“There is growing optimism that we could get some partial agreement on trade between the U.S. and China. I think both sides are needing to have a win,” said Edward Moya, senior market analyst at OANDA in New York.
“So there is less safe-haven demand for the dollar. If we get some type of trade deal or mini-agreement or mandate, you’re going to see that being supportive of European assets. We’re seeing the euro now back above $1.10, which has been the resistance,” he added.
The dollar index fell 0.42 per cent, with the euro up 0.33 per cent to $1.1005.
Sterling was last trading at $1.2434, up 1.88 per cent on the day and the safe-haven yen suffered through a risk-on session, recently down 0.42 per cent versus the greenback at 107.94 per dollar.
The Turkish lira, under pressure this week after Ankara began air attacks over northern Syria, gained 0.71 per cent versus the U.S. dollar at 5.83. It is still on track for its largest weekly drop in eight.
Trump’s tweet announcing his Friday meeting with Liu “is giving market participants a reason to believe that perhaps a trade deal or at least a partial trade deal might be announced as early as tomorrow,” said Robert Pavlik chief investment strategist at SlateStone Wealth LLC in New York.
Separately, Chinese state news agency Xinhua reported Liu said Beijing was willing to reach an agreement with Washington to prevent any further escalation of the trade war.
The Dow Jones Industrial Average rose 153.58 points, or 0.58 per cent, to 26,499.59, the S&P 500 gained 18.93 points, or 0.65 per cent, to 2,938.33 and the Nasdaq Composite added 47.04 points, or 0.6 per cent, to 7,950.78.
Stock futures were down over 1 per cent overnight on contradicting reports of the state of talks between China and the United States.
China is unlikely to be willing to make an easy compromise with a U.S. president who seems increasingly vulnerable to domestic political pressure as opposition Democrats seek to impeach him, analysts said.
The pan-European STOXX600 index rose 0.65 per cent and MSCI’s gauge of stocks across the globe gained 0.55 per cent.
Emerging market stocks lost 0.09 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.41 per cent lower, while Japan’s Nikkei rose 0.45 per cent.
Treasury yields rose, also on hopes of a trade resolution between the United States and China. However, some investors highlighted the difficulty of using the rapidly shifting headlines on trade to direct investment strategy.
“A choppy overnight session driven by conflicting signals regarding trade negotiations highlights the difficulty in chasing every 5 basis point move in yields, in that the proximate justification can unwind just as quickly,” said Ian LLyngen, head of U.S. rates strategy at BMO Capital Markets.
Benchmark 10-year notes last fell 20/32 in price to yield 1.6543 per cent, from 1.587 per cent late on Wednesday.
The 2-year note last fell 3/32 in price to yield 1.5222 per cent, from 1.474 per cent late on Wednesday.
Among the widely followed emerging markets, Turkey’s government bonds saw another day of falls as investors fretted about the negative international reaction to Ankara’s military operation in northeast Syria.
Focus was also on the mood in Ecuador, as another day of fierce protests against recent fuel subsidy cuts hammered its bonds on Wednesday.
Safe-haven gold fell; spot gold dropped 0.7 per cent to $1,494.99 an ounce.