Stocks Rally, Bonds Drop as US Nears China Deal: Markets Wrap
(Bloomberg) — The record-breaking rally in global equities found new impetus on signs the US and China were closing in on a trade deal, triggering gains in copper and oil. Treasuries dropped across the curve and gold slid as demand for the traditional safe havens waned.
MSCI’s index for global stocks climbed 0.3% to an all-time high, helped by records for Japan, South Korea and a gauge of Asian shares. Futures for the S&P 500 and the Nasdaq 100 advanced after both underlying indexes closed at a new peak last week. Copper — a bellwether for global growth — surged, as did oil, with the potential US-China deal bolstering the demand outlook. Contracts also indicated a stronger open for European stocks.
The Australian and New Zealand dollars, popular proxies for China exposure, strengthened. As risk appetite grew, gold dropped 0.8% to about $4,080 an ounce, while the yield on the 10-year Treasury rose four basis points to 4.04%. Soybeans rallied on hopes for a revival in bilateral trade of the crop.
“This looks like a win on optics for both sides,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “Broader markets are likely to take this as a short-term risk-on cue. But the rally will need to be backed by fundamentals to sustain.”
The easing of trade tensions between the world’s two largest economies is giving investors renewed confidence to build on the equity rally from April lows, when markets slumped as President Donald Trump moved to rewrite global trade rules with new tariffs. That advance faces a key test this week, with the Federal Reserve poised to deliver its policy decision and earnings from US technology firms offering clues on the durability of profit growth.
Top negotiators from the US and China came to terms on a range of contentious points, setting the table for Trump and Xi to finalize a deal and ease trade tensions that have rattled global markets.
The Chinese Communist Party’s official mouthpiece called on the world’s biggest economies to “jointly safeguard hard-won achievements” from their latest trade talks, ahead of a high-stakes meeting between Trump and Xi Jinping.
What Bloomberg strategists say…
There will be very few willing now to take the risk of missing out on a relief rally given the positive noises coming from both the US and China. There are other drivers that will help spur investors to pile into stock markets — a Fed rate cut is priced in for this week’s meeting, and investors are anticipating that earnings from tech giants will reinforce the AI boom as a key driver for broader market gains.
Trade negotiators from China and the US announced Sunday that they’d struck a slew of agreements on issues spanning tariffs, shipping fees, fentanyl and export controls over two days in Malaysia. That marked a significant cooling of tensions, after a fresh volley of tariff threats and tit-for-tat export controls threatened to derail the bilateral relationship.
“While sentiment appears optimistic, the ultimate market impact will depend on the Trump-Xi meeting,” said Dilin Wu, a strategist at Pepperstone Group. “This event remains the most critical catalyst, determining whether any agreement can actually be implemented.”
The encouraging signals from both sides of the negotiations were a marked contrast from recent weeks, when Beijing’s announcement of new export restrictions and Trump’s reciprocal threat of staggering new tariffs threatened to plunge the world’s two largest economies back into an all-out trade war.
Elsewhere, Argentine assets are set to rally as President Javier Milei’s strong showing in legislative elections beat even the most bullish of forecasts, easing investor concern his economic overhaul of the crisis-prone nation would stall.
Indonesian stocks tumbled by their most in over six months after an MSCI Inc. consultation paper raised concerns about a potential re-weighting of local shares.
Separately, Treasury Secretary Scott Bessent said the candidate pool for the next Fed chair has been narrowed to Christopher Waller, Kevin Warsh, Kevin Hassett, Michelle Bowman, and Rick Rieder.
Bessent, who is leading interviews for the position, said he’s planning to do a second round of interviews and hopes to present a “good slate” to Trump after the Thanksgiving holiday.
Traders will be looking ahead to a busy week of central bank announcements that includes rate decisions from the Fed, the European Central Bank and the Bank of Japan.
The Fed is forecast to cut rates by 25 basis points. On Friday, Wall Street saw a relief rally as cooler-than-estimated inflation data reinforced trader conviction on rate cuts.
The slowest pace in three months for underlying inflation was welcomed by traders, who’ve been flying almost blind amid the dearth of data since the start of the government shutdown. The ECB and BOJ are expected to leave rates unchanged.
Meanwhile, on Wednesday and Thursday, five firms that account for about a quarter of the S&P 500 Index — Microsoft Corp., Alphabet Inc., Meta Platforms Inc., Amazon.com Inc. and Apple Inc. — will report their earnings.
Asia too entered its busiest week of the current earnings season. Of the more than 1,200 MSCI Asia Pacific Index constituents, roughly 500 firms are scheduled to report. Highlights include South Korea’s Samsung Electronics Co., Japan’s Hitachi Ltd. plus China’s megabanks, alcohol giant Kweichow Moutai Co. and automaker BYD Co.
Catalysts such as the Fed meeting “will quickly shift the market’s focus back to the economic fundamentals, testing how much of this optimism can truly translate into sustained growth momentum,” said Hebe Chen, an analyst at Vantage Markets in Melbourne.
Corporate News:
Novartis AG agreed to buy biotechnology company Avidity Biosciences Inc. in a deal that values it at $12 billion, according to the Swiss drugmaker, making it the company’s biggest acquisition in more than a decade. HSBC Holdings Plc said it sees a provision of $1.1 billion on litigation related to claims against investors who lost money in Bernard Madoff’s fraud. Boeing Co. factory workers in St. Louis narrowly rejected a new five-year contract that would boost wages by an average of 24%, extending a nearly three-month strike that has disrupted the company’s main military manufacturing hub. Eyewear retailer Lenskart Solutions Ltd. said its upcoming initial public offering in Mumbai will seek to raise as much as 72.8 billion rupees ($828 million) as India’s market for new listings heats up. Chinese shipping stocks gained after the nation reached a preliminary consensus with the US on issues including shipping levies. South Korean shipbuilding stocks such as Samsung Heavy advance on speculation that President Trump may visit a shipbuilder during the APEC summit this week. Seres Group Co. started taking investor orders for a Hong Kong listing that may raise as much as HK$13.2 billion ($1.7 billion), making the electric-vehicle maker the latest big Chinese company to go public in the financial hub. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.9% as of 6:54 a.m. London time Nasdaq 100 futures rose 1.1% The MSCI Asia Pacific Index rose 1.5% Hong Kong’s Hang Seng rose 1% The Shanghai Composite rose 1.2% Euro Stoxx 50 futures rose 0.5% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was unchanged at $1.1627 The Japanese yen was little changed at 152.99 per dollar The offshore yuan rose 0.2% to 7.1122 per dollar The British pound rose 0.1% to $1.3326 Cryptocurrencies
Bitcoin rose 2.3% to $115,979.2 Ether rose 4.2% to $4,232.71 Bonds
The yield on 10-year Treasuries advanced four basis points to 4.04% Germany’s 10-year yield advanced four basis points to 2.63% Britain’s 10-year yield was little changed at 4.43% Japan’s 10-year yield advanced one basis point to 1.665% Australia’s 10-year yield advanced four basis points to 4.18% Commodities
Spot gold fell 0.8% to $4,078.74 an ounce West Texas Intermediate crude rose 0.4% to $61.74 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson and Zhu Lin.
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