Stocks climb on Huawei extension, buoying U.S. Treasuries

NEW YORK (Reuters) - Global equity markets edged higher on Monday, lifting prices of U.S. government debt, as a 90-day extension allowing U.S. companies to do business with China’s Huawei eased the latest spike in investor angst over U.S.-Sino trade tensions.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 18, 2019. REUTERS/Brendan McDermid

The three major U.S. stock indexes set closing highs for a second straight session, while MSCI’s gauge of world equity markets also edged up to less than 1% from a record peak set in January 2018.

The stock rally reversed early losses sparked by conflicting reports about the outlook for ending the 16-month trade war between the world’s two largest economies that has weighed on global growth and roiled capital markets.

The U.S. Commerce Department added Huawei Technologies Co Ltd HWT.UL to an economic blacklist in May, citing security concerns, but has allowed it to purchase some American-made goods in a series of 90-day license extensions.

Early on Monday, a CNBC report cast fresh doubts on the prospects for phase one of a U.S.-China trade deal, saying the mood in Beijing was pessimistic due to President Donald Trump’s reluctance to roll back tariffs on Chinese imports.

The report halted rallies in Europe and Asia after Chinese state media Xinhua over the weekend said Washington and Beijing had held “constructive” talks.

“Progress doesn’t happen in a straight line and that is starting to frustrate people today,” said Scott Ladner, chief investment officer at Horizon Investments in Raleigh, North Carolina. “It feels very herky-jerky.”

MSCI's all-country world index .MIWD00000PUS of global stock performance gained 0.15%.

In Europe, the pan-European STOXX 600 index .STOXX closed down 0.01%, while the FTSEurofirst 300 index .FTEU3 of leading regional shares fell 0.04%. Both are trading at four-year highs.

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On Wall Street, the Dow Jones Industrial Average .DJI rose 31.33 points, or 0.11%, to 28,036.22. The S&P 500 .SPX gained 1.57 points, or 0.05%, to 3,122.03 and the Nasdaq Composite .IXIC added 9.11 points, or 0.11%, to 8,549.94.

The safe-haven Japanese yen gained and gold prices erased losses to settle slightly higher.

Investors hope that tariffs the United States and China have imposed on each other’s goods will be rolled back as they are seen as harming global economic growth.

Overnight in Asia, stocks closed higher.

Tokyo's Nikkei .N225 gained 0.49% and China's blue-chip CSI300 index .CSI300 rose 0.8% after the People's Bank of China, in a surprise move, said it was lowering the seven-day reverse repurchase rate.

The dollar index .DXY fell 0.19%, with the euro EUR= up 0.2% to $1.1072. The yen JPY= strengthened 0.09% versus the greenback at 108.69 per dollar.

The price of benchmark 10-year U.S. Treasury notes US10YT=RR rose 5/32 to push yields down to 1.8152%.

U.S. gold futures GCv1 settled up 0.2% at $1,471.90 an ounce.

Concerns about plentiful crude supplies in 2020 weighed on the oil market, which expects the Organization of the Petroleum Exporting Countries to extend production cuts in early December to help avoid a new global glut.

Brent crude futures LCOc1 fell 86 cents to settle at $62.44 per barrel. West Texas Intermediate (WTI) crude CLc1 slid 67 cents to settle down at $57.05 a barrel.

Reporting by Herbert Lash; additional reporting by Agamoni Ghosh in Bengaluru and Karen Brettell in New York; Editing by Dan Grebler and Sonya Hepinstall