By Rodrigo Campos
NEW YORK (Reuters) – An index of stocks across the globe hit a more than four-month high on Wednesday on hopes for progress in trade talks between the United States and China, and a supportive backdrop from major central banks also helped push risk assets higher.
Crude prices rose to their 2019 highs helped by output cuts from top producers as well as U.S. sanctions on OPEC members Iran and Venezuela.
Stocks started with a rally in Asia that pushed the MSCI world equity index to its highest since October after U.S. President Donald Trump said negotiations with China were going well and suggested he was open to extending the deadline to complete them beyond March 1.
Many had feared U.S. tariffs on $200 billion worth of Chinese imports would rise to 25 percent from 10 percent if no trade deal was reached by then.
European stock indexes also strengthened, with a region-wide index at a four-month high.
On Wall Street, stocks wobbled before ending higher after Federal Reserve policymakers signaled they will soon lay out a plan to manage the bank’s $4 trillion balance sheet, but policymakers are still debating how long their newly adopted “patient” stance on U.S. rates policy will last.
The tone of the Fed meeting “was decidedly noncommittal, and the minutes recreated this noncommittal message in more detail,” said Jefferies analysts led by Ward McCarthy in a note.
“The FOMC is on track to curtail the normalization of the balance sheet without providing any solid reasoning for doing so.”
The Dow Jones Industrial Average rose 63.12 points, or 0.24 percent, to 25,954.44, the S&P 500 gained 4.94 points, or 0.18 percent, to 2,784.7 and the Nasdaq Composite added 2.30 points, or 0.03 percent, to 7,489.07.
The pan-European STOXX 600 index rose 0.67 percent and MSCI’s gauge of stocks across the globe gained 0.47 percent.
Emerging market stocks rose 1.19 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.13 percent higher. Hong Kong’s Hang Seng gained 1 percent to close at the highest level since August.
While hopes for a trade deal between the world’s two largest economies are seen as the primary driver for world stocks, dovish central bank messages from the United States to Asia and the ECB are also playing a part.
On currency markets, the dollar index rose 0.04 percent, with the euro down 0.02 percent to $1.1338 while sterling was last trading at $1.3047, down 0.11 percent on the day.
The Japanese yen weakened 0.20 percent versus the greenback at 110.87 per dollar after Japan recorded its biggest annual drop in exports in January for more than two years, and on recent dovish Bank of Japan signals.
The offshore yuan rose 0.4 percent against the dollar after touching a three-week high of 6.7067.
U.S. oil prices rose above $57 per barrel for the first time in three months supported by OPEC-led supply cuts and U.S. sanctions on Iran and Venezuela, but soaring U.S. production and expectations of an economic slowdown kept the market wobbly. [O/R]
U.S. crude rose 1.47 percent to $57.28 per barrel and Brent was last at $67.14, up 1.04 percent on the day.
U.S. Treasury yields ticked up after the Fed minutes showed committee members were undecided on whether to hike interest rates again this year.
Benchmark 10-year notes last fell 1/32 in price to yield 2.6483 percent, from 2.645 percent late on Tuesday.
The 30-year bond last fell 7/32 in price to yield 2.9984 percent, from 2.988 percent late on Tuesday.
(Graphic: Global assets in 2019 – http://tmsnrt.rs/2jvdmXl)
(Graphic: Global currencies vs. dollar – http://tmsnrt.rs/2egbfVh)
(Additional reporting by Kate Duguid, Caroline Valetkevitch and Richard Leong in New York; Editing by David Gregorio, James Dalgleish and Cynthia Osterman)