Markets Rally as Trade and Brexit Uncertainties Recede

Date : 12/13/2019 @ 3:38AM
Source : Dow Jones News

Markets Rally as Trade and Brexit Uncertainties Recede

By Steven Russolillo and Joanne Chiu 

A clearer picture on trade relations and Brexit buoyed global markets, shoring up investors' appetite for risk late in what has already been a banner year for world stocks.

President Trump has agreed to a limited trade agreement with Beijing, The Wall Street Journal reported Thursday. In the U.K., an exit poll and early results pointed to a sweeping election victory for Prime Minister Boris Johnson's Conservative Party, bolstering hopes for a smooth exit from the European Union.

Japan's Nikkei 225 index kicked off the rally in Asia on Friday morning, with a 2.3% gain that put the benchmark on pace for its best session since February. Hong Kong's Hang Seng Index gained 1.7%. The Shanghai Composite in China rose 1%. Other benchmark indexes in South Korea and Taiwan also advanced more than 1%.

S&P 500 stock futures advanced 0.4%. The Dow Jones Industrial Average and the S&P 500 had both gained nearly 1% on Thursday after Mr. Trump said the U.S. and China were nearing a deal, with the S&P reaching a record closing high.

"The geopolitical risks thought to be strangling world economic growth, incredibly, just in the last 24 hours, seem to be closer to getting resolved in a big, big way," said Chris Rupkey, chief financial economist at MUFG. "The outlook in 2020 looks better than it has in months."

Mr. Rupkey said he expects stocks around the world to keep rallying and bond yields to rise further.

Sterling jumped 2.5% against the dollar, to the highest since May 2018. Benchmark 10-year U.S. Treasury yields on Thursday rose by the most in three years on increasing optimism about growth. They rose another 0.01 percentage point to 1.91% in Friday morning trading in Asia.

The WSJ U.S. Dollar Index fell 0.44% to 89.94, the lowest since July. Mansoor Mohi-uddin, senior macro strategist at NatWest Markets, said a U.S.-China trade deal, Britain's possible orderly exit from the EU, and looser monetary policy in the U.S. and Europe together set the stage for a "decent selloff" in the dollar.

Write to Steven Russolillo at steven.russolillo@wsj.com and Joanne Chiu at joanne.chiu@wsj.com

 

(END) Dow Jones Newswires

December 12, 2019 22:23 ET (03:23 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.


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