Stocks Rally Extends to Second Day; Yuan Advances: Markets Wrap

Equities in Japan climbed to a three-month high and shares in Hong Kong and China rose. That built on a rally that began in Asia Tuesday and extended into the U.S. session despite the U.S.-China trade war deepening as Beijing announced retaliatory tariffs on $60 billion of U.S. goods and the Trump administration threatened duties on virtually all Chinese imports. The dollar dipped and Treasuries were steady. European equity-index futures climbed.

The threat to global growth remains, though investors have now had months to take a view on the trade war and many assets are already pricing in rising tensions, helping to cushion the impact from the latest blows. The S&P 500 Index registered its biggest gain in almost three weeks, led by technology stocks, which had been hammered in Monday’s session. Treasuries held on to losses that pushed the yield on 10-year U.S. bonds above 3 percent.

“It’s more likely that there will be some negotiated resolution coming through in the near term,” George Schultze, founder and CEO of Schultze Asset Management in New York, told Bloomberg TV. “Cooler heads will eventually prevail because otherwise both sides are shooting themselves in the foot by taking these extreme stances and going back and forth with tit-for-tat tariffs.”

Elsewhere, oil retained the bulk of gains triggered by Saudi Arabia’s expression of comfort with Brent oil prices rising above $80 a barrel. West Texas crude briefly breached $70 a barrel. The yen was steady after the Bank of Japan left its policy unchanged, keeping monetary stimulus in place. And President Donald Trump praised North Korean leader Kim Jong Un for agreeing to further steps toward giving up his nuclear weapons, signaling that stalled negotiations might get back on track.

Here are some key events coming up this week:

The Bank of Thailand decides on policy Wednesday. Britain releases inflation data on Wednesday. European PMIs are due on Thursday. The Organization of Petroleum Exporting Countries and its allies meet in Algiers this weekend.These are the main moves in markets:

Stocks

Japan’s Topix index rose 1.5 percent at the 3 p.m. close in Tokyo. Hong Kong’s Hang Seng Index gained 1.4 percent. The Shanghai Composite Index added 1.5 percent. It jumped 1.8 percent Tuesday. Futures on the S&P 500 Index were little changed. The underlying gauge climbed 0.5 percent Tuesday. Futures on the U.K.’s FTSE 100 Index rose 0.2 percent. The MSCI Asia Pacific Index increased 1.2 percent.

Currencies

The yen was steady at 112.31 per dollar after slipping 0.5 percent. The offshore yuan rose 0.2 percent to 6.8484 per dollar. The Bloomberg Dollar Spot Index fell 0.1 percent. The euro bought $1.1682, up 0.1 percent.

Bonds

The yield on 10-year Treasuries held at about 3.05 percent after jumping six basis points to the highest in almost four months. Australia’s 10-year bond yield jumped four basis points to 2.70 percent.

Commodities

West Texas Intermediate crude rose 0.2 percent to $69.97 a barrel. Gold rose 0.5 percent to $1,203.76 an ounce. Copper built on Tuesday’s advance, rising 0.7 percent to $6,128 per metric ton.