NEW YORK (Reuters) - The dollar rose and global equity markets rallied on Monday, with the Nasdaq and S&P 500 hitting new highs as investors grew more hopeful the United States and China could soon sign an interim deal to end their trade war.
Trade-sensitive miners in Europe and semiconductors on Wall Street climbing on reports suggesting the world’s two largest economies were close to an initial trade deal. A burst of M&A activity also lifted equities.
European shares posted their biggest daily gain in three weeks as France’s LVMH agreed to buy luxury jeweler Tiffany & Co for $16.2 billion, and Swiss drugmaker Novartis agreed to a $9.7 billion acquisition of The Medicines Co.
In the United States, Charles Schwab Corp agreed to buy TD Ameritrade Holding Corp in an all-stock deal valued at $26 billion while EBay Inc will sell ticketing unit StubHub to ticket reseller Viagogo Ltd for $4.05 billion in cash.
Reports that an elusive “phase one” U.S.-Sino trade agreement was near drove broad buying in stock markets.
“The market’s really assuming that we get an initial deal,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “There’s a lot of optimism, excessive optimism, but there is still some upside assuming that it does occur.”
Corporations have put a hold on capital expenditures on property, plant and equipment as trade uncertainty has dragged on the industrial side of the U.S. economy, Ghriskey said.
“I don’t see the market selling off when eventually we get a deal, but there’s limited upside at that point,” he said.
U.S. national security adviser Robert O’Brien said on Saturday that a trade pact was still possible by year’s end, while Chinese state-backed tabloid Global Times said Beijing and Washington were “very close” to a “phase one” trade deal.
Adding to the positive mood was the weekend announcement that China would seek to improve protections for intellectual property rights, a sticking point in the talks.
MSCI’s gauge of stocks across the globe gained 0.70% and its emerging markets index added 0.47%. The pan-European STOXX 600 index rose 1.0%.
Apple Inc, Microsoft Corp and Amazon.com, along with microchip stocks, lifted U.S. stocks.
The Philadelphia Semiconductor index jumped 2.43% and was on pace for its best day in just over three weeks.
The Dow Jones Industrial Average rose 190.85 points, or 0.68%, to 28,066.47. The S&P 500 gained 23.35 points, or 0.75%, to 3,133.64 and the Nasdaq Composite added 112.60 points, or 1.32%, to 8,632.49.
The benchmark S&P 500 has gained 25% so far this year, while the Nasdaq is up 30%.
Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan bounced 0.7% and Japan’s Nikkei firmed 0.7%.
Gold fell for a fourth straight session, sliding to a two-week low, as investors’ appetite for riskier assets increased. Oil prices edged higher.
U.S. gold futures settled down 0.5% at $1,456.90 an ounce. Brent crude futures gained 26 cents to settle at $63.63 a barrel and West Texas Intermediate (WTI) crude rose 24 cents to settle at $58.01 a barrel.
Core euro zone bond yields rose slightly, as positive trade developments trumped last week’s weak euro zone data.
The German benchmark 10-year bond yield rose two basis points in early London trading before easing to trade almost flat on the day at -0.349%.
U.S. Treasury yields slid ahead of the Treasury Department’s scheduled sale of $113 billion in coupon-bearing supply this week and on optimism about trade.
Benchmark 10-year notes rose 4/32 in price to push their yield down to 1.7586%.
The dollar index rose 0.05%, with the euro down 0.11% to $1.1009. The Japanese yen weakened 0.29% versus the greenback at 108.96 per dollar.
Graphic: Global assets in 2019, here
Graphic: World FX rates in 2019, here
Graphic: MSCI All Country Wolrd Index Market Cap, here
Reporting by Ritvik Carvalho; additional reporting by Sagarika Jaisinghani and Lisa Pauline Mattackal in Bangalore and Wayne Cole in Sydney; Editing by Dan Grebler, Nick Zieminski and David Gregorio
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