Stocks Rise as Trade Talk Rumbles On; Oil Steadies: Markets Wrap

• March 05 2018
• Samuel Potter

European stocks followed Asian peers higher, extending the rebound in risk assets as investors judged the selloff sparked by global trade fears as overdone. The dollar and oil were steady as Treasuries edged higher.

European stocks followed Asian peers higher, extending the rebound in risk assets as investors judged the selloff sparked by global trade fears as overdone. The dollar and oil were steady as Treasuries edged higher.

The Stoxx Europe 600 Index rose a second day, tracking advances across Asia as benchmarks from Hong Kong to Seoul clawed back losses incurred since U.S. President Donald Trump laid out a series of import tariffs last week. In the latest development, the European Commission proposed retaliatory measures on U.S. goods ranging from T-shirts and whiskey to motorcycles and ladders. The plans were limited in scope, targeting some 2.8 billion euros ($3.5 billion) of merchandise, and both German bund yields and the euro were flat.

The rebound in stocks suggests fears of an escalation of protectionism may be easing, even as Europe mulls its potential response to U.S. duties. Trump is facing domestic resistance to his planned levies on steel and aluminum imports -- House Speaker Paul Ryan has called on him to reconsider, while White House economic adviser Gary Cohn is said to be arranging a meeting between Trump and U.S. executives in a bid to halt the order.

“People are realizing a large trade war does not have consensus support, and decent leads last night in the U.S. are driving global risk assets higher,” said Joshua Crabb, the head of equities at Old Mutual Global Investors in Hong Kong.

Elsewhere, Bank of Japan Governor Haruhiko Kuroda appeared to dial back some of his recent perceived hawkishness. The Australian dollar pared gains as the central bank left interest rates unchanged and gave no indication an increase is coming soon. And in Italy, stocks and bonds rose as the country began the potentially lengthy process of forming a new government.

Terminal users can read more in our markets blog.

Here are some key events coming up this week:

• The Chinese People’s Political Consultative Conference runs through March 15 and overlaps with the National People’s Congress meetings in Beijing, through March 20.
• Australia GDP data is due Wednesday.
• The ECB isn’t expected to change policy on Thursday, but the Governing Council may discuss a change to pave the way for the end of quantitative easing. 
• BOJ monetary policy decision and briefing on Friday.
• U.S. monthly payrolls data come Friday.

These are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index climbed 0.8 percent as of 9:06 a.m. London time.
• Futures on the S&P 500 Index rose 0.2 percent to the highest in a week.
• The MSCI Asia Pacific Index rose 1.3 percent and the largest advance in almost three weeks.
• The U.K.’s FTSE 100 Index increased 1 percent, the biggest climb in more than three weeks.
• The MSCI Emerging Market Index rose 1.4 percent in the largest advance in almost three weeks.

Currencies

• The Bloomberg Dollar Spot Index fell less than 0.05 percent.
• The euro climbed less than 0.05 percent to $1.2341, the strongest in more than two weeks.
• The British pound declined 0.1 percent to $1.3832.
• The Japanese yen jumped 0.1 percent to 106.05 per dollar.
• South Africa’s rand dipped less than 0.05 percent to 11.8364 per dollar.
• The MSCI Emerging Markets Currency Index rose 0.2 percent to the highest in a week.

Bonds

• The yield on 10-year Treasuries decreased one basis point to 2.87 percent.
• Germany’s 10-year yield rose less than one basis point to 0.65 percent.
• Britain’s 10-year yield increased one basis point to 1.495 percent, the highest in a week.

Commodities

• West Texas Intermediate crude fell less than 0.05 percent to $62.54 a barrel.
• Gold climbed 0.2 percent to $1,322.93 an ounce, the highest in more than a week.

— With assistance by Adam Haigh