Stocks Rise to Records Amid China, Deals Optimism: Markets Wrap

Story by Bloomberg
Written by Claire Ballentine and Vildana Hajric

U.S. equities closed at records amid optimism over China trade relations and a fresh wave of merger and acquisition activity. The dollar strengthened.


The S&P 500, Dow Jones Industrial Average and Nasdaq Composite Indexes reached all-time highs after China said over the weekend that it will tighten intellectual property rules, a move aimed at boosting the chances of a trade deal between the two largest economies. Tech shares led the gains. Charles Schwab Corp. agreed to buy TD Ameritrade Holding Corp., while LVMH purchased U.S. jeweler Tiffany & Co.

“I don’t think we would be seeing these types of deals if the outlook for markets and the economy weren’t favorable,” said Adam Phillips, director of portfolio strategy for EP Wealth Advisors. “This is one additional piece we can look at to see the outlook for markets is a positive one.”

The Stoxx Europe 600 Index advanced, with all 19 industry sectors closing in the green. Equities climbed across Asia, led by those in Hong Kong, where local elections brought a landslide victory to pro-democracy candidates. The dollar gained versus the euro and yen.

While doubts about the rally remain and haven investments such as bonds seem well-supported, stocks globally are approaching a third month of gains. The S&P 500 Index is building on an advance from Friday, when President Donald Trump said he was “very close” to a trade pact with Chinese President Xi Jinping, even as Treasuries hold on to most of their two-week surge.

“Markets are relatively optimistic about a phase one trade deal happening, but obviously there’s more uncertainty until President Trump and President Xi sit down and sign something more formal,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

Elsewhere, China was planning a record sale of sovereign bonds in dollars, with a potential $6 billion offering, according to people familiar with the discussions. West Texas-grade oil futures drifted higher. Bitcoin dropped as much as 11% before paring the decline.

Here are some key events coming up this week:

Federal Reserve Chairman Jerome Powell speaks on Monday at the Greater Providence Chamber of Commerce annual dinner in Providence, Rhode Island.

Alibaba starts trading in Hong Kong on Tuesday.

Reserve Bank of Australia Governor Philip Lowe will give a speech on unconventional monetary policy on Tuesday evening in Sydney.

U.S. consumer spending data is due Wednesday, along with GDP, jobless claims and durable goods.

The U.S. celebrates Thanksgiving on Thursday, when equity and bond markets will be shut.

The Bank of Korea sets policy on Friday.

These are the main moves in markets:

Stocks

The S&P 500 Index advanced 0.7% to 3,133.57 as of 4:01 p.m. New York time, the highest on record with the largest gain in more than a week.

The Dow Jones Industrial Average advanced 0.7% to 28,065.39, the highest on record with the biggest gain in more than a week.

The Nasdaq Composite Index surged 1.3% to 8,632.49, the highest on record with the largest jump in more than six weeks.

The MSCI All-Country World Index advanced 0.7% to 547.17, the highest in 22 months on the biggest gain in more than a week.