Stocks Rise With Futures as Trade Tensions Ease: Markets Wrap
(Bloomberg) — Stocks resumed gains on Monday as signs of easing trade frictions helped boost sentiment after volatility tied to concerns about US regional lenders.
The Stoxx 600 Europe index climbed 0.8%, led by banks. Among individual movers, Kering SA jumped more than 4% after agreeing to sell its beauty division to L’Oreal SA. Defense stocks rallied after conflict reignited in Gaza over the weekend, with Rheinmetall AG up more than 4%. Submarine-builder TKMS surged in its Frankfurt trading debut after its carve-out from Thyssenkrupp AG amid Europe’s defense boom.
US equity futures signaled further gains for the S&P 500 and Nasdaq 100 after both gauges ended the week in the green. MSCI’s gauge of Asia-Pacific equities jumped 1.8%, while an index of emerging-market stocks rose 1.4%.
French bonds declined after S&P Global Ratings downgraded the nation’s sovereign credit score. Treasuries and the dollar were steady. Gold held Friday’s steep drop, while oil dipped after posting a third weekly decline.
Investor sentiment improved as President Donald Trump sought to ease trade tensions with China on Friday after markets were rattled US bank-credit woes. Solid results from regional lenders helped ease fears about credit quality. A new round of US-China trade talks is set for this week in Malaysia, with Treasury Secretary Scott Bessent and Vice Premier He Lifeng facing the task of negotiating down new escalatory measures.
“The US-China trade spat appears to be easing with conciliatory comments coming from both the US and China,” said Mohit Kumar, chief economist and strategist at Jefferies International Ltd. “We would be carefully monitoring both the liquidity conditions and private credit exposures in the coming days and weeks, but it is not something that causes us concern. Our broader view remains bullish over the medium term, and we are looking for some selloff in the near term to add to our positions.”
When asked by Fox News on Sunday about his threat to raise the tariff on Chinese goods by 100%, Trump said the levy was “not sustainable,” though “it could stand.” The US will “be fine” with China, he added. Bessent virtually met with He on Friday, discussions that Chinese state media described as a constructive exchange of views.
The moves signaled an effort by Washington to calm fears of a full-blown trade war with China that could have a seismic effect on the global economy.
“There’s a prevailing belief that US–China trade headlines will remain skewed toward a positive outcome,” Chris Weston, head of research at Pepperstone Group, wrote in a note to clients.
From the delayed US inflation report for September, to a high-level party meeting in China and a busy week of earnings — including Netflix Inc. and Tesla Inc. — it’s a packed week for investors. September’s consumer price index, originally set for Oct. 15, will now come on Friday.
What Bloomberg strategists say…
Government debt globally is poised to gain with uncertainties hanging over the economic outlook. US notes should lead the way with the Federal Reserve widely expected to cut interest rates at next week’s meeting.
— Garfield Reynolds, Markets LIV Team Leader. For Full analysis, click here.
On France, S&P Global downgraded the country to A+ from AA-, saying the nation’s budget uncertainty was “elevated.” France has now lost its double-A rating at two of the three major credit assessors in little more than a month, potentially forcing some funds with ultra-strict investment criteria to sell the country’s bonds.
Meanwhile, tension in the Middle East is ratcheting up again. Israel launched strikes against Hamas in Gaza and reportedly suspended all aid shipments on Sunday after blaming Hamas for a lethal Palestinian ambush that left two soldiers dead.
Corporate News:
Kering SA agreed to sell its beauty division to L’Oreal SA as part of a long-term strategic alliance, with Chief Executive Luca de Meo seeking to turn around the French luxury giant’s fortunes. Holcim Ltd. agreed to buy Xella, a European walling systems company, in a €1.85 billion ($2.2 billion) deal, as it expands its building solutions business following the spin off of its North American unit. Apple Inc.’s latest generation of iPhones is off to a faster start than usual, with its most basic model surging in popularity. Volkswagen AG Chief Executive Officer Oliver Blume faces a significant reduction in remuneration after ending his additional role as head of Porsche AG, according to Süddeutsche Zeitung. Sany Heavy Industry Co. started taking investor orders to raise as much as HK$12.4 billion ($1.6 billion) in a Hong Kong listing, joining a flood of Chinese companies seeking to capitalize on the Asian financial hub’s hot market. Activist investor Jana Partners has built a stake in Cooper Cos. and plans to push for strategic alternatives, according to the Wall Street Journal. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.8% as of 8:54 a.m. London time S&P 500 futures rose 0.4% Nasdaq 100 futures rose 0.5% Futures on the Dow Jones Industrial Average rose 0.4% The MSCI Asia Pacific Index rose 1.9% The MSCI Emerging Markets Index rose 1.5% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1664 The Japanese yen fell 0.1% to 150.77 per dollar The offshore yuan was little changed at 7.1249 per dollar The British pound was little changed at $1.3422 Cryptocurrencies
Bitcoin rose 2.1% to $111,175.33 Ether rose 1.4% to $4,058.71 Bonds
The yield on 10-year Treasuries was little changed at 4.02% Germany’s 10-year yield was little changed at 2.59% Britain’s 10-year yield was little changed at 4.53% Commodities
Brent crude fell 0.6% to $60.94 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Anand Krishnamoorthy.
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