Equity markets added to a year-end rally on Monday, with both a gauge of stock performance worldwide and Wall Street hitting new highs amid renewed optimism over U.S.-China trade and growth prospects.
China’s finance ministry said it will lower tariffs on products ranging from frozen pork and avocados to certain semiconductors next year as Beijing looks to boost imports amid a slowing economy and a trade war with the United States.
China will implement temporary import tariffs, which are lower than the most-favored-nation tariffs, on more than 850 products, an increase from 706 products that were taxed at temporary rates in 2019, the ministry said.
MSCI’s gauge of stocks across the globe gained 0.11 per cent, reaching a new record, while its emerging market index rose 0.26 per cent.
MSCI’s all-country world index has risen more than 3 per cent in December as U.S.-China trade tensions eased and confidence grew that Britain would avoid a chaotic exit from the European Union. The index is up 23 per cent in 2019, set for its best year in a decade.
The market remains focused on the trade war, said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“It’s a rally being based upon momentum buying now. Stocks are being marked up, and it will continue right up until year end,” he said, referring to the U.S. equity market.
President Donald Trump on Saturday said the United States and China would “very shortly” sign their so-called Phase 1 trade pact.
Canada’s main stock index hovered below record highs on Monday.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 10.27 points, or 0.06 per cent, at 17,128.71. The index hit a record high of 17,166.39 earlier in the session.
Gains came even as data showed Canada’s economy unexpectedly shrank by 0.1 per cent in October, the first monthly decline since February, partly due to a U.S. auto strike that hit manufacturing. Analysts in a Reuters poll had forecast a gain of 0.1 per cent.
October’s growth figures were the latest in a string of disappointing data that analysts say may prompt the Bank of Canada to mull a rate cut.
Rate-sensitive financial stocks were down 0.6 per cent.
Despite the latest dose of trade optimism, gold price - which tends to gain during times of political or economic uncertainties - rose 0.5 per cent and silver prices jumped 1.3 per cent. That helped the materials index up about 2.2 per cent.
Enrrgy stocks gained 1.6 per cent as oil prices rose narrowly.
Leading the index were Baytex Energy Corp., up 8.8 per cent, First Majestic Silver Corp., up 7.9 per cent, and Alamos Gold Inc., higher by 7.7 per cent.
Lagging shares were Aurora Cannabis Inc., down 9.7 per cent, Hexo Corp., down 4.4 per cent, and Enghouse Systems Ltd., lower by 3.8 per cent.
Wall Street’s main indexes closed at record highs on Monday.
The Dow Jones Industrial Average rose 96.61 points, or 0.34 per cent, to 28,551.7, the S&P 500 gained 2.8 points, or 0.09 per cent, to 3,224.02 and the Nasdaq Composite added 20.69 points, or 0.23 per cent, to 8,945.65.
The Dow was lifted by a 2.9-per-cent gain in shares of Boeing Co after the planemaker fired Chief Executive Dennis Muilenburg over intense scrutiny and industrial setbacks sparked by twin fatal crashes of its 737 MAX jetliner.
Shares in Europe traded near break-even, with the pan-European STOXX 600 index closing down 0.03 per cent.
The blue-chip FTSE 100 index in London rose 0.54 per cent to a five-month high and ninth straight gain, its longest winning streak since May 2017.
In France, the CAC 40 index gained 0.13 per cent but the trade-sensitive Deutsche Boerse DAX fell by the same amount. The index has gained steadily since September as the prospect of a Sino-U.S. trade deal improved.
The dollar held near a two-week high against a basket of currencies, while sterling fell on concerns over the British government’s hard line on Brexit talks.
The dollar, which benefits when the U.S. economy outperforms others, as well as during bouts of risk aversion due to its safe-haven status, has been supported since Washington and Beijing came to an interim trade agreement earlier this month.
The dollar index is up 1.6 per cent for the year.
On Monday the index fell 0.03 per cent, with the euro up 0.14 per cent to $1.1093. The Japanese yen strengthened 0.05 per cent versus the greenback at 109.38 per dollar, while Sterling traded at $1.2932, down 0.54 per cent on the day.
U.S. Treasury yields were little changed to slightly lower in generally thin trading as markets headed into the end of 2019.
New orders for U.S.-made capital goods barely rose in November and shipments fell, suggesting business investment will probably remain a drag on economic growth in the fourth quarter. .
Details of the Commerce Department report were not as soft as the headline suggested, analysts said, lifting yields off their lows.
Benchmark 10-year U.S. Treasury notes last fell 5/32 in price to yield 1.9329 per cent.
Euro zone bond yields were broadly flat on Monday as investors chose safe-haven government debt in thin pre-holiday trade. Germany’s benchmark 10-year Bund was little changed at -0.24 per cent, about 6 basis points below last week’s high.
Oil prices were little changed on Monday as Russia said an OPEC-led producer group may consider easing output cuts next year, offsetting support from some investor optimism that an initial U.S.-China trade deal would be signed soon.
Brent crude settled up 25 cents, or 0.4 per cent, at $66.39 after a day of thin trading ahead of the Christmas holiday. West Texas Intermediate ended the session up 8 cents, or 0.1 per cent, at $60.52 a barrel.
The Organization of the Petroleum Exporting Countries and other top producing nations led by Russia agreed this month to extend and deepen output cuts in the first quarter of 2020.
However, Russian Energy Minister Alexander Novak said on Monday that the group, known as OPEC+, may consider easing the output restrictions at its meeting in March.
“We can consider any options, including gradual easing of quotas, including continuation of the deal,” Novak told Russia’s RBC TV in an interview recorded last week, adding that Russia’s oil output was set to hit a record high this year.