Shares rally on China-US trade hopes, dollar trades at multi-year lows

Mint

2 days ago

(Updates with U.S. markets open, adds New York dateline, fresh analyst quote)
S&P 500 and Nasdaq reach record highs
European shares rise on easing US-China trade tension
Dollar holds near lowest levels in more than three years
Oil prices gain, gold slips
By Chibuike Oguh and Elizabeth Howcroft
NEW YORK/PARIS, June 27 (Reuters) - Global shares reached a record high on Friday, helped by market optimism over signs of progress in U.S.-China trade talks, while the dollar held close to its lowest levels in more than three years.
The benchmark S&P 500 index and Nasdaq hit all-time highs, lifted partly by gains in megacap growth stocks including Nvidia and Amazon.
The S&P 500 index and Nasdaq are headed for a weekly gain and are up about 5% this year overall, following a volatile first half of the year, dominated by U.S. President Donald Trump's tariff announcement on April 2, which sent stocks plunging.
The pan-European STOXX 600 index was up 0.66% on the day, set for a weekly gain.
The MSCI World Equity index touched a record high and was set for a weekly gain of 3.2%. London's FTSE 100 rose 0.35%. Asian shares hit their highest in more than three years in early trading.
"It's a continuation of this monster rally since early April," said James St. Aubin, chief investment officer at Ocean Park Asset Management in Santa Monica, California. "It's been quite an improbable comeback and it continues, assuming that the tariff controversy is no longer a major issue in the psyche of the market."
Investors saw a trade agreement between the United States and China on Thursday on how to expedite rare earth shipments to the United States as a positive sign, amid efforts to end the tariff war between the world's two biggest economies.
Trump has set July 9 as the deadline for the European Union and other countries to reach a deal to reduce tariffs.
Traders took confidence too from a ceasefire between Iran and Israel and markets stepped up bets for U.S. rate cuts amid the possibility of Trump announcing a new, more dovish Federal Reserve chair ahead of the expiration of Jerome Powell's term next year.
Data showed U.S. consumer spending unexpectedly fell by 0.1% in May for the second time this year, while monthly inflation maintained a moderate pace of increase.
"We're starting to see earnings estimates for the next 12 months on the rise again after taking a little bit of a dip and that's what the market is buying into," St. Aubin added.
The dollar remained on the backfoot, hovering near its lowest level in 3-1/2 years against the euro and sterling.
The dollar weakened 0.16% to 0.799 against the Swiss franc but was up 0.18% to 144.63 against the Japanese yen . The euro was at $1.1708, getting a lift after data showed French consumer prices rose more than expected in June.
The dollar index was down 0.1% on the day at 97.269, holding near its lowest in more than three years. The dollar is having its worst start to a year since the era of free-floating currencies began in the early 1970s.
Traders have stepped up their bets on U.S. rate cuts, and are now pricing in 64 basis points (bps) of easing this year versus 46 bps expected on Friday.
The yield on benchmark U.S. 10-year notes rose 1.2 basis points to 4.265%.
German 30-year government bond yields were on track for their biggest weekly increase in nearly four months after rising this week on expectations of increased borrowing by Germany's government.
Oil prices meanwhile rose but were set for their steepest weekly decline since March 2023, as the absence of significant supply disruption from the Iran-Israel conflict saw any risk premium evaporate.
Brent crude futures rose 0.66% to $68.18 a barrel while U.S. West Texas Intermediate crude was up by 1% to $65.91 . Spot gold fell 1.72% to $3,270.50 an ounce.
(Reporting by Chibuike Oguh in New York and Elizabeth Howcroft in Paris; Additional reporting by Dhara Ranasinghe; Editing by Kim Coghill and Emelia Sithole-Matarise)