World stocks rallied to six-month highs on Wednesday thanks to signs of progress in U.S.-China trade talks, reassuring economic data and hopes of a softer Brexit, helping push Germany’s 10-year bond yield back above zero percent.
Oil prices rose to within striking distance of the key $70 per barrel mark — a multi-month high — on supply concerns.
And sterling extended its gains after British Prime Minister Theresa May said late on Tuesday she would seek another Brexit delay to agree an EU divorce deal with the opposition Labour Party leader, raising hopes of a “softer” Brexit.
Signs of progress in U.S.-China trade talks and decent Chinese and U.S. factory activity data in recent days has lifted sentiment and taken the edge off world recession fears.
Europe’s stock markets rose to their highest since August, while MSCI’s broadest index of Asia-Pacific shares outside Japan climbed to a seven-month peak.
That left the MSCI world equity index at a six-month high, while U.S. equity futures pointed to a solid start for Wall Street shares.
“What we’re seeing is that markets have climbed a wall of worry but there is progress on trade, a recession is unlikely, central banks have made nods to more dovish policy,” said Chris Bailey, European strategist at Raymond James. “If you put that into the mix I’m not surprised risk assets have moved up.”
Germany’s benchmark 10-year Bund yield rose to 0.01 percent, having hit a 2-1/2 year low at around minus 0.09 percent a week ago. Britain’s 10-year gilt yield jumped 7.5 basis points to 1.08 percent, heading for its biggest daily jump in three months.
Safe-haven gold also suffered from stronger world stock markets, dipping to $1,292.63 per ounce.
Oil prices rose for a fourth day, pushing Brent toward a nearly five-month high of $70 a barrel as support from OPEC-led supply cuts and U.S. sanctions overshadowed a report showing an unexpected rise in U.S. inventories.[O/R]
U.S. West Texas Intermediate crude rose 0.16 percent to $62.68, having hit $62.99, the highest since Nov. 7.
BREXIT ROLLER COASTER
Sterling rose further as traders welcomed news that Britain’s May would begin cross-party talks with the opposition Labour party as a signal that Britain will end up with a “softer” exit from the European Union.
The pound strengthened 0.4 percent to $1.3196, its highest since March 28. The British currency had slipped below $1.30 on Friday on growing fears of a no-deal Brexit.
The dollar strengthened 0.15 percent against the yen to 111.49 and the euro added 0.4 percent to $1.12440.
The dollar index, which tracks the greenback against a basket of six major rivals, eased 0.4 percent to 97.009.
Cryptocurrency bitcoin, which surged 18.7 percent on Tuesday following a major order by an anonymous buyer, added another 1.2 percent to $4,961.20.
Source: News Agencies