Markets wrap: Stocks rise as Asia rebounds; lira jumps on rates

Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo, Japan, on Thursday, Aug. 30, 2018. Japan’s Topix index closed lower after fluctuating as investors assessed trade frictions and geopolitical risks. (Bloomberg pic)

LONDON: US equity futures rose with European stocks and Asian shares ended the longest losing streak in 16 years on the prospect of fresh trade negotiations between the world’s two biggest economies. The euro was flat before a rate decision, the pound climbed as the Bank of England kept borrowing costs unchanged, and Turkey’s lira surged as the country’s central bank raised interest rates.

Automakers led the gains as the Stoxx Europe 600 Index rose a second day, while contracts on the Dow, S&P 500 and Nasdaq all pointed to a firmer open after the U.S. government proposed another round of trade talks with Beijing. The MSCI Asia Pacific Index climbed for the first time in 11 sessions, with equities rallying in Shanghai. Treasuries edged lower and the dollar was flat, while Italy’s bonds slipped with other European sovereign debt as speculation swirled around the fate of the country’s finance minister.

After the Bank of England held rates as expected and as traders digest Turkey’s hike, all eyes now turn to the European Central Bank which is seeking a move away from easy policy without staving off growth.

Terminal users can follow TOPLive’s coverage of the ECB policy decision here.

Meanwhile, markets appear to be giving a cautious welcome to news that the US and Chinese governments are working out the details for a new round of trade talks, just days after President Donald Trump threatened to slap tariff hikes on nearly all goods from China.

Elsewhere, emerging-market shares and currencies climbed. Crude oil pared two days of gains made on the outlook for tighter supply. The potential impact on commodities from Hurricane Florence faded with lower wind speeds.

Here are some key events coming up this week:

US inflation data is due out on Thursday. China releases August industrial production, retail sales data on Friday. US retail sales, industrial production, consumer sentiment on Friday.

And these are the main moves in markets:

Stocks

Futures on the S&P 500 Index advanced 0.2% as of 7.03am New York time, the highest in more than a week. The Stoxx Europe 600 Index climbed 0.2% to the highest in more than a week. The UK’s FTSE 100 Index dipped 0.2%. Germany’s DAX Index gained 0.7% to the highest in more than a week on the biggest rise in more than two weeks. The MSCI Asia Pacific Index jumped 0.9%, hitting the highest in a week with the first advance in more than two weeks. The MSCI Emerging Market Index gained 1.1%, the biggest rise in more than two weeks.

Currencies

The Bloomberg Dollar Spot Index fell less than 0.05% to the lowest in two weeks. The euro climbed less than 0.05% to $1.1631, the strongest in two weeks. The British pound increased 0.1% to $1.3059, the strongest in six weeks. The Japanese yen declined 0.3% to 111.58 per dollar.

Bonds

The yield on 10-year Treasuries jumped one basis point to 2.98%, the highest in six weeks. Germany’s 10-year yield advanced one basis point to 0.42%. Britain’s 10-year yield increased one basis point to 1.496%. The spread of Italy’s 10-year bonds over Germany’s climbed one basis point to 2.5479 percentage points.

Commodities

West Texas Intermediate crude fell 1.3% to US$69.49 a barrel, the largest fall in a week. Gold fell less than 0.05% to $1,206.00 an ounce.