World stock markets were buoyed by deal-making news and solid earnings from Dow components Cisco and Walmart on Thursday while strong economic data pushed U.S. bond yields higher even as investors struggled to make sense of the latest developments in global trade relations.
A spike in U.S.-China tensions over import tariffs has convulsed markets recently as investors seek to parse statements from government leaders to gauge the direction of negotiations.
News that U.S. President Donald Trump is expected to delay auto tariffs appeared to improve the trade tone on Wednesday, but later in the day the Trump administration hit Chinese telecoms giant Huawei with severe sanctions.
“The market is really having a hard time pricing in this trade war,” said Mark Hackett, chief of investment research at Nationwide. “There was a belief earlier in the week that it was going to be catastrophic and we have gained back all of that decline. In my opinion, it is probably a little too optimistic to declare victory.”
Canada’s main stock index rose for the third straight day on Thursday, boosted by energy stocks which gained on the back of higher oil prices and as a private survey showed higher job additions in April.
The Toronto Stock Exchange’s S&P/TSX Composite index was unofficially up 125.72 points, or 0.77 per cent, at 16,443.86.
Ten of the index’s 11 major sectors were higher, including the energy sector, which jumped 0.7 per cent.
Canada added 61,700 jobs in April, the second straight month of robust jobs gains, led by hiring in the education and health services and construction sectors, according to a report from ADP released on Thursday.
The financials sector gained 0.4 per cent, while industrials rose 2 per cent.
The materials sector, which includes precious and base metals miners, was the only sector trading 0.7 per cent lower.
On Wall Street, Dow Jones Industrial Average rose 214.72 points, or 0.84 per cent, to 25,862.74, the S&P 500 gained 25.37 points, or 0.89 per cent, to 2,876.33 and the Nasdaq Composite added 75.90 points, or 0.97 per cent, to 7,898.05
Shares of Cisco Systems and Walmart both gave boosts to the S&P 500 and the Dow after their respective earnings reports. Cisco shares rose 6.7 per cent and Walmart rose 1.4 per cent.
The Philadelphia semiconductor index fell 1.8 per cent following the Huawei news.
The pan-European STOXX 600 index rose 1.27 per cent.
Germany’s DAX jumped 1.7 per cent, fueled by news of corporate deals. Thyssenkrupp shares rose 9.4 per cent after Reuters reported Finnish company Kone is assessing a bid for the German conglomerate’s elevators division.
MSCI’s gauge of stocks across the globe gained 0.72 per cent.
U.S. homebuilding increased more than expected in April and activity in the prior month was stronger than initially thought. In a separate report, the number of Americans filing applications for unemployment benefits fell more than expected last week.
U.S. Treasury yields rose following the strong economic data.
Benchmark 10-year notes last fell 6/32 in price to yield 2.398 per cent, from 2.379 per cent late on Wednesday.
The U.S. dollar rose against a basket of currencies as investors focused on trade war tensions, while the euro was hurt by concerns about next week’s European parliamentary elections.
The dollar index rose 0.23 per cent, with the euro down 0.21 per cent to $1.1177.
“The risk is that we get more populist comments, such as from the Italian deputy PM,” said Credit Agricole FX strategist Manuel Olivieri. “Italy remains one of the factors keeping euro downside risks high.”
Oil futures were up more than 1 per cent on Thursday as tensions in the Middle East grew, with a Saudi-led coalition launching air strikes in retaliation for recent attacks on its crude infrastructure.
Brent crude futures settled at $72.62 a barrel, up 85 cents, or 1.18 per cent, after touching their highest level in three weeks. U.S. West Texas Intermediate (WTI) crude futures settled at $62.87 a barrel, gaining 81 cents, or 1.37 per cent, after hitting its strongest level in two weeks.
The Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week.
Saudi Arabia’s deputy defence minister accused Iran of ordering the drone attack on the pumping stations. It comes after attacks on four oil tankers off the coast of United Arab Emirates on Sunday.
Taken together, the escalation of tensions has compounded fears of lowered supply in the Middle East. U.S. staff were ordered to leave the American embassy in Baghdad on Wednesday out of concern about perceived threats from Iran.