Mon | Jul 22, 2019

Global stock rally builds as US-China trade talks wrap up

Published:Thursday | January 10, 2019 | 12:00 AM
US President Donald Trump
Chinese President Xi Jinping


Stocks around the world built on their early 2019 rally Wednesday after negotiators from the US and China extended their trade talks to a third day, which investors took as a sign the discussions were productive even though no major breakthroughs have been announced.

Oil prices also continued to climb , and stocks linked to faster economic growth, such as technology companies, kept rising.

The S&P 500 index climbed 16 points, or 0.6 per cent, to 2,590 as of 12:45 p.m. eastern time. It's on track for its fourth consecutive gain. The Dow Jones Industrial Average picked up 157 points, or 0.7 per cent, to 23,944. The Nasdaq composite rose 67 points, or 1 per cent, to 6,964. The Russell 2000 index of smaller and US-focused stocks added 11 points, or 0.8 per cent, to 1,437.

Indexes in Europe also rose. Germany's DAX and the French CAC 40 each added 0.8 per cent and Britain's FTSE 100 gained 0.7 per cent. Asian stocks made bigger gains. Japan's Nikkei 225 gained 1.1 per cent, and the Hang Seng in Hong Kong rallied 2.3 per cent. South Korea's Kospi advanced 1.9 per cent.

The latest round of trade negotiations between the world's two largest economic powers has now been concluded, but investors were cheered when they learned the two-day talks would be extended by a day. No details were immediately announced.

The Trump administration wants the government of President Xi Jinping to alter its handling of technology and intellectual property held by foreign companies, and change plans for government-led creation of Chinese leaders in advanced technologies. Chinese officials have suggested that they could revise some of their industrial plans but won't abandon larger goals that they consider a path to prosperity and global influence.

Technology companies kept edging higher after their steep losses over the final months of 2018. Chipmakers made some of the largest gains. Chipmakers took big losses in the second half of 2018 as investors worried about an abrupt slowdown in the global economy as well as the possibility that demand for chips was falling and supplies were too large. The Philadelphia Semiconductor index dropped 25 per cent from early June to late December.

On Wednesday, Micron Technology surged 6.2 per cent to $35.85, and Applied Materials gained 5.1 per cent to $34.59 while Broadcom climbed 3.9 per cent to $245.30. Elsewhere, Microsoft gained 1.8 per cent to $104.63, and Apple picked up 2.2 per cent to $154.04.

Beer and wine maker Constellation Brands slumped after it cut its annual profit forecast, saying it now expects sales and profits for its wine and spirits division to fall in the current fiscal year. The stock gave up 10.4 per cent to $154.46.

The Corona maker also said it wrote down the value of its $4 billion investment in Canadian marijuana producer Canopy Growth by $164 million. Pot stocks made big gains in 2018 as Canada legalised recreational marijuana, and drugmakers and consumer-focused companies like Constellation, Molson Coors, and Altria struck partnerships with growers to develop products together.

However the sector has been extremely volatile. Canopy climbed 9.7 per cent to $32.52 on Wednesday, while Cronos Group and Tilray made smaller gains.

Oil prices also continued to rally. U.S. crude rose 4.2 per cent to $51.89 a barrel in New York. It hadn't traded above $50 a barrel in almost a month. Brent crude, used to price international oils, added 4 per cent to $61.09 a barrel in London.

Crude oil is on track to rise for the eight day in a row and ninth in the last 10. U.S. crude has jumped 14 per cent so far in 2019.