Global equity markets pared losses on Thursday as efforts by China to smooth the path forward in U.S.-Sino trade talks helped sooth investor sentiment, though fears remained that a phase one deal might not occur until next year.
Oil prices rose to a two-month high after Reuters reported the Organization of the Petroleum Exporting Countries and its allies are likely to extend existing output cuts until mid-2020.
Yields on U.S. Treasury debt rose, snapping three sessions of declines, bolstered by China saying it was willing to work with the United States to resolve core trade concerns, which rekindled some hope for a bilateral deal.
A Wall Street Journal report that said China had invited top U.S. trade negotiators for a new round of face-to-face talks in Beijing also lifted sentiment.
Canada’s main stock index finished narrowly lower on Thursday, but gains in shares of energy and cannabis producers kept losses at bay.
The Toronto Stock Exchange’s S&P/TSX Composite index was down 6.63 points, or 0.04 per cent, at 16,999.19.
Five of the index’s 11 major sectors were lower, led by a 1.4-per-cent decline in the materials sector.
Energy stocks climbed 1 per cent as oil prices rose following a Reuters report that OPEC and its allies are likely to extend output cuts until mid-2020.
Healthcare stocks jumped 6.8 per cent as cannabis producers rallied after reports that the U.S. House Judiciary Committee approved a bill to legalize cannabis on a federal level in the United States.
Hexo Corp. rose 34 per cent, while Aurora Cannabis Inc. and Canopy Growth Corp. were up 18.3 per cent and 15.1 per cent, respectively.
Germany’s trade-sensitive DAX index pared most losses to close 0.16 per cent lower, while the Dow Industrials and S&P 500 index also pared losses and were down slightly with an hour of trading remaining in the session.
“This just shows that the trade deal is not dead and that we will get some sort of an extended truce, which is a positive,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“What we’re going through now is a market beginning to realize the daily rhetoric of the trade news – one day positive, one day negative – is beginning to wear off,” he said, adding he would not be surprised to see stocks end the day higher.
MSCI’s gauge of stocks across the globe shed 0.23 per cent, while the pan-European STOXX 600 index lost 0.40 per cent.
On Wall Street, the Dow Jones Industrial Average fell 55.2 points, or 0.2 per cent, to 27,765.89, the S&P 500 lost 4.99 points, or 0.16 per cent, to 3,103.47 and the Nasdaq Composite dropped 20.52 points, or 0.24 per cent, to 8,506.21.
The latest news on the trade deal came after a series of headlines earlier this week that suggested ongoing talks were unraveling.
Reuters reported on Wednesday that negotiations to finalize a deal may extend into next year as Beijing presses for more extensive tariff rollbacks and the Trump administration counters with heightened demands of its own.
Benchmark German bond yields also ended a three-day streak of declines to edge higher.
German 10-year bond yields, considered a euro zone benchmark, rose more than 2 basis points to -0.325 per cent.
The benchmark 10-year U.S. Treasury note fell 12/32 in price to push yields up to 1.7774 per cent.
The dollar firmed late in the session.
The dollar index rose 0.06 per cent, with the euro down 0.14 per cent to $1.1057. The Japanese yen weakened 0.04 per cent versus the greenback at 108.67 per dollar.
Gold prices eased. U.S. gold futures fell 0.7 per cent to settle at $1,463.60 per ounce.
Oil prices rose more than 2 per cent on Thursday to the highest in nearly two months following a Reuters report that OPEC and its allies are likely to extend output cuts until mid-2020 and fresh signs that China had invited U.S. trade negotiators for a new round of talks.
Brent crude ended the session up $1.57, or 2.5 per cent, at $63.97 a barrel, while West Texas Intermediate (WTI) crude settled up $1.57, or 2.8 per cent, to $58.58.
WTI touched a session high of $58.67 a barrel, the highest since Sept. 23 and Brent climbed to a high of $64.03, the highest since Sept. 24.
To support oil prices, the Organization of the Petroleum Exporting Countries and its allies are likely to extend output cuts to June when they meet next month, according to OPEC sources.
OPEC meets on Dec. 5 at its headquarters in Vienna, followed by talks with a group of other oil producers, lead by Russia, known as OPEC+. The current supply cuts deal runs through to March 2020.