By Adam Haigh
Stocks in Asia followed U.S. equities higher as investors reassessed the danger of a trade-damaging spiral of tariff increases in the world’s top two economies. The U.S. dollar climbed and Treasuries were steady.
Japanese and South Korean shares led gains in the region and Australian equities advanced, with markets in China and Hong Kong closed Thursday for holidays. Optimism looked to spread to Europe where equity-index futures gained. The S&P 500 Index swung from a loss to close up 1.2 percent, and 10-year Treasury yields turned higher, after traders’ optimism grew that the U.S. and China will step back from the brink of a trade war. Representatives from China and the U.S. left the door open for a negotiated solution to avoid tariff proposals that wouldn’t take effect for months.
Federal Reserve officials highlighted the difficulty in assessing the impact of the trade dispute uncertainty to an otherwise bright economic outlook. A board member, Lael Brainard, said trade policy is “certainly something that I take into account, in thinking about risks.”
Investors are adapting to intraday swings in equities after years of relative calm. They are having to weigh the growing protectionist rhetoric between the U.S. and China against the chances of measures having a meaningful effect on the still-upbeat global growth picture.
Elsewhere, the Australian dollar led declines against the greenback after Australia’s three-month bank bill swap rate fell for the first time in almost two months. Oil gained after a larger-than-expected drop in crude stockpiles. Bitcoin held below $7,000. Gold retreated as risk aversion faded.
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Here are some key events on the calendar for the remainder of this week:
- U.S. employment data are due Friday; the jobless rate probably fell in March after holding at 4.1 percent for five straight months.
- The Reserve Bank of India decides on policy Thursday.
These are the main moves in markets:
Stocks
- Japan’s Topix index gained 1.1 percent at the close in Tokyo.
- Australia’s S&P/ASX 200 Index added 0.5 percent.
- South Korea’s Kospi index rose 1.2 percent.
- Futures on the S&P 500 were up 0.3 percent. The underlying gauge gained 1.2 percent Wednesday.
- Contracts on the FTSE 100 Index jumped 1.3 percent as of 7:08 a.m. London time and Euro Stoxx 50 futures also advanced 1.3 percent.
Currencies
- The Bloomberg Dollar Spot Index gained 0.1 percent.
- The yen declined 0.1 percent 106.90 per dollar.
- The Aussie dollar dropped 0.4 percent to 76.87 U.S. cents.
- The euro was at $1.2272.
Bonds
- The yield on 10-year Treasuries rose almost one basis point to 2.81 percent.
- Australia’s 10-year yield rose almost three basis points to 2.66 percent. The three-year yield dropped almost two basis points to 2.14 percent.
- The German 10-year bund yield rose almost two basis points to 0.52 percent.
Commodities
- West Texas Intermediate crude rose 0.4 percent to $63.62 a barrel.
- Gold dropped 0.3 percent to $1,328.65 an ounce.
— With assistance by Lu Wang, and Sarah Ponczek