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Trade Truce Evens Markets Out

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Global stocks leaped while bonds retreated last Monday when China and the United States had an agreement to resume trade talks – the truce happened over the weekend at the G20 Summit in Japan. Meanwhile, top investors are betting that any development between the globe’s two biggest economies will fire up the world’s economic growth.

China and the United States had a truce on Saturday to continue discussions about trade following U.S. President Donald Trump’s concessions offer to Chinese President Xi Jinping when the two prominent leaders saw each other at the sidelines of the G20 summit held in Japan.

Those agreements consist of easing restrictions on Chinese tech giant Huawei Technologies Co Ltd [HWT.UL] and non-imposition of new tariff measures. China committed to make unstated fresh purchases of farm products from the U.S. plus the comeback to the deliberation table.

Hans Peterson, global head of asset allocation of SEB Investment Management, said that the meeting turned out to be as good as possible and provides more time to digest and obtain a slightly better activity in the world economy.

Massive wins in Japan and Europe lifted the broadest global index of MSCI. MIWD00000PUS increased by 0.6%, appending to a rally that is dubbed to be one of the world’s stock market’s highest first halves to a year ever recorded.

The benchmark S&P 500 index fleetingly toppled its last record high at 2,964.15, which happened on June 21, before losing some gains again.

On Wall Sreet, (.DJI) or the Dow Jones Industrial Average soared 0.44% or 117.47 points, ending at  26,717.43. Meanwhile, the S&P 500 (.SPX) acquired 0.77% or 22.57 points at 2,964.33. Lastly, the Nasdaq Composite (.IXIC) surged 1.06% or 84.92 points at 8,091.16.

The Dow had gained over 200 points in early trading.

Scott Brown, the chief economist of Florida-based Raymond James, said that “any step toward a trade resolution – and it doesn’t have to be a lot of progress – just a step, is viewed very positively by markets.” He added that investors are now looking on the positive side, hoping that there would an actual trade resolution at the end of the line.

ChineseChina’s CSI300 index (.CSI300) for blue-chip stocks soared 2.6%, the highest it gained since late April. Germany’s export-heavy DAX (.GDAXI) acquired 1.5% the highest it recorded since August. The Huawei ban and the activity of the M&A  fueled Europe’s tech sector (.SX8P) to a one-year momentum.

Fed fund futures plunged more than five points as the market retreated to the possibility of a 0.5% interest rate slice this month to around 15%, from a close 50% in the previous week.

SEB’S Peterson added that expectations of the Fed in the market might be very aggressive, potentially “a bit too aggressive.”

Meanwhile, on currency markets, safe refuge like the Swiss franc and the yen scaled back some recent gains. The dollar toppled 0.4% against the yen equal to 108.26 JPY and 0.7% on the Swiss franc CHF equal to 0.9830 francs.

The dollar appends 0.4% on an array of major currencies .DXY to 96.531. The dollar’s earnings affected gold, which plunged 1.5% equal to $1,388 per ounce XAU.

Oil prices increased around $1 per barrel before losing some of its gains after OPEC, and its allies posed to set extended cuts in supply most likely until the end of the year. Iraq now joins top oil producers, Saudi Arabia, and Russia, in promoting the policy.

Brent crude LCOc1 futures increased 0.2% or 10 cents, to $64.64 per barrel. U.S. crude CLc1 rose 0.3% or 18 cents, at  $58.65 each barrel.