A gauge of global stock markets rallied along with U.S. Treasury yields on Wednesday as optimism abounded for a trade thaw between the United States and China while sterling bounced on indications UK Prime Minister Theresa May would survive a no-confidence vote.
U.S. Treasury yields advanced in tandem with Wall Street’s gains after U.S. President Donald Trump said trade talks with China were progressing with discussions under way by telephone and more meetings likely among officials of both countries.
In an interview with Reuters on Tuesday, Trump also said he would intervene in the Justice Department’s case against a top executive at China’s Huawei Technologies Co Ltd if it served national security interests or helped to close a trade deal.
China made its first major U.S. soybean purchases in more than six months on Wednesday, two U.S. traders said, and its first since Trump and his Chinese counterpart Xi Jinping struck a trade war truce in early December.
But after a spate of dizzying volatility in the past few days, there was some wariness about whether gains would hold.
“The market just kind of gets whipsawed every time you get a headline,” said Tom Hainlin, global investment strategist at Ascent Private Capital Management in Minneapolis.
“These are policies and concerns that don’t have a lot of informational arbitrage - it is hard to know exactly where the U.S.-China trade is going to go.
The Dow Jones Industrial Average rose 158.8 points, or 0.65 percent, to 24,529.04, the S&P 500 gained 14.45 points, or 0.55 percent, to 2,651.23 and the Nasdaq Composite added 66.48 points, or 0.95 percent, to 7,098.31.
Still, U.S. equities finished well off their session highs and traders were not convinced the market was ready for a sustained move upward after two-straight days of gains.
“The risk right now is to the downside still, even though we had this reversal,” said Gordon Charlop, managing director at Rosenblatt Securities in New York.
Canada’s main stock index rose on Wednesday, helped by shares of energy companies despite a fall in oil prices.
The Toronto Stock Exchange’s S&P/TSX composite index was up unofficially up 115.23 points, or 0.79 per cent, at 14,783.06.
Ten of the index’s 11 major sectors traded higher with the energy sector up 1.6 per cent.
Cenovus Energy Inc. rose 4.2 per cent, while Canadian Natural Resources Ltd. and Encana Corp. jumped 2.2 per cent and 2.1 per cent, respectively.
Industrial stocks, a sector sensitive to trade-related news, rose 0.6 per cent. Bombardier Inc. was up 3.2 per cent, while WestJet Airlines Ltd. rose 4.7 per cent.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 1 per cent as gold futures rose.
Leading the index were Maxar Technologies Ltd., up 7.6 per cent, Kelt Exploration Ltd., up 7.3 per cent, and Pretium Resources Inc., higher by 7 per cent.
Lagging shares were Aphria Inc., down 5.1 per cent, Canadian Apartment Properties Real Estate Investment Trust, down 4.2 per cent, and Canopy Growth Corp., lower by 3.3 per cent
The pan-European STOXX 600 index rose 1.69 per cent to give the index its best two-day performance in two-and-1/2 years and MSCI’s gauge of stocks across the globe gained 1.10 per cent.
The British pound sterling jumped off 20-month lows as Prime Minister May vowed to fight a challenge to her leadership, saying a change could jeopardize Britain’s divorce from the European Union.
May won a vote of confidence in her leadership right as U.S. markets closed for the session.
Sterling was last trading at $1.261, up 1.01 per cent on the day.
The dollar index fell 0.33 per cent, with the euro up 0.46 per cent to $1.1366.
Benchmark 10-year notes fell 8/32 in price to yield 2.9096 per cent, from 2.881 per cent late on Tuesday.
Oil ended lower on Wednesday after reports that Iran’s oil minister said divisions exist within the Organization of the Petroleum Exporting Countries, leading futures to give up earlier gains on OPEC-led production curbs and export cuts from Libya.
Crude pared gains late in the session after reports that Iran’s Oil Minister Bijan Zanganeh told state television that the cartel had been unfriendly toward OPEC’s third largest producer.
OPEC last week agreed to production cuts only after Iran, whose crude exports have been depleted by U.S. sanctions since early November, greenlighted the deal.
OPEC said on Wednesday it had offset a drop in sanctions-hit exports from Iran. Iran’s President Hassan Rouhani also said on state TV on Tuesday that export have improved since early November.
Earlier in the trading day, prices rose, bolstered by export cuts from Libya and planned OPEC-led production cuts
Brent crude futures settled at $60.15 a barrel, down 5 cents on the day, while U.S. crude was down 50 cents at $51.15 a barrel.
Oil prices have fallen by a third since the start of October, when it hit a four-year high above $87. It is set for its biggest quarterly slide since the fourth quarter of 2014.
The market also shrugged off government data that showed U.S. crude stockpiles fell 1.2 million barrels last week, a much smaller drawdown than the 10 million-barrel decline reported by industry group the American Petroleum Institute and less than half the draw of 3 million barrels analysts had forecast.
“The divergence from the large inventory decline reported by the API makes the report appear more negative than it actually was,” said John Kilduff, a partner at Again Capital Management in New York.
Concerns about global oversupply of crude, driven largely by U.S. output from shale formations has driven the market lower in recent weeks, and prompted OPEC and some non-OPEC producers including Russia to cut supply by 1.2 million barrels per day (bpd) for six months from Jan. 1.