World stocks and EM currencies up on new US-China trade talks

New York — US stocks and emerging-market currencies rebounded on Thursday after China said it will hold trade talks with the US later in August and Turkey’s lira continued its recovery run.

US equities rose on hopes that Beijing and Washington may resolve a conflict that has roiled financial markets since early March. On Thursday, China said a delegation led by its vice-commerce minister would travel to the US for talks.

The dollar dipped on news of the US-China talks as investors returned to currencies that had been sold off. The Chinese yuan gained 1.1% to 6.87 to the dollar.

The euro rose 0.3% after closing the previous day at its lowest point since July 2017. The Turkish lira rose 3% to 5.79 to the dollar, supported by Qatar’s pledge on Wednesday to invest $15bn in Turkey.

Other emerging-market currencies, such as Russia’s rouble and Mexico’s peso, also rose.

The retreat in the dollar also steadied global equities. MSCI’s index of world stocks rose 0.7%. Emerging-market stocks, which on Wednesday had fallen more than 20% from their January intra-day high, edged up slightly. Metals markets moved higher as well. Copper rose 1.97% to $5,915.00 a tonne, after having confirmed a bear market on Wednesday, closing 20.9% lower than its recent high reached on June 7.

“Investors around the world have been anxious about the US-China trade dispute and its potential impact on global growth,” said Kate Warne, investment strategist at Edward Jones in St Louis. “Anything that means investors are less concerned about slowing growth in China is good news for emerging markets and good news for parts of the commodities complex.”

Turkish finance minister Berat Albayrak held a conference call in which he assured international investors that the country would emerge stronger from its currency crisis and that its banks were healthy. Albayrak also said Turkey had no plans to seek help from the International Monetary Fund (IMF) or impose capital controls to stop money flowing abroad.

“I’m not seeing any sign of change in economic policy, but the absence of new bad news is good for the markets,” Warne said of Turkey.

In US markets, the Dow Jones Industrial Average rose 401.82 points, or 1.6%, to 25,564.23; the S&P 500 gained 28.4 points, or 1.01%, to 2,846.77; and the Nasdaq Composite added 66.32 points, or 0.85%, to 7,840.43. The pan-European FTSEurofirst 300 index rose 0.44%.

Hopes that China and the US could ease trade tensions helped Chinese stocks pare losses. The Shanghai Composite Index closed down 0.6%, while Hong Kong’s Hang Seng index ended 0.8% lower. Japan’s Nikkei average closed 0.1% lower in choppy trade.

Oil also recovered somewhat after Wednesday’s slide, though a weakening outlook for crude demand kept prices in check. US crude rose 0.54% to $65.36 a barrel and Brent was last at $71.20, up 0.62% on the day.

US treasury yields were steady after edging higher overnight on the news of US-China trade talks. Benchmark 10-year notes last fell 9/32 in price to yield 2.8822%, from 2.851% late on Wednesday.

Reuters