US stocks reclaimed an all-time high after three months, with the final leg coming on rising optimism for a trade deal with China. Treasuries slumped at the start of a week packed with earnings and the Federal Reserve’s policy decision.
The S&P 500 took out its July record after President Donald Trump said the US is ahead of schedule to sign part of the trade deal. Microsoft jumped to a record after winning a Pentagon contract, while AT&T climbed following a board shuffle. Tiffany surged after LVMH said it held discussions with the jeweller. PG&E plunged on liability risk from California wildfires. The Stoxx Europe 600 rose even as banks slipped after HSBC’s disappointing earnings. The 10-year Treasury yield hit a six-week high.
The pound steadied versus the euro after the European Union agreed to a Brexit deadline extension, easing the risk of the UK leaving the bloc without a deal on October 31. European bonds edged lower, while gilts were steady.
Investors began the week with analysts predicting the Fed will trim rates by 25 basis points on Wednesday and then signal it’s done with easing for now. Fed Chair Jerome Powell has previously said the wider US economy is in a good place, yet citing slowing global growth and uncertainty around trade as risk factors. After several corporate earnings reports last week seemed to underscore that view, Alphabet is set to release results on Monday.
Meanwhile, China said parts of the text for the first phase of a trade deal with the US are “basically completed” following consensus on subjects including standards used by agricultural regulators. That followed a similar statement Friday from the US side, with Presidents Donald Trump and Xi aiming to sign a pact in Chile next month. Yields on China’s 10-year notes jumped the most since April.
An Asia-Pacific equities benchmark rose toward its fifth gain in six sessions. Shares increased in Shanghai, with blockchain-related stocks climbing after Chinese President Xi Jinping hailed the technology.
Elsewhere, Argentine bonds fell after opposition candidate Alberto Fernandez secured victory in Sunday’s presidential election, with business-friendly incumbent Mauricio Macri conceding. WTI crude oil slipped after the biggest weekly advance in more than a month. Bitcoin jumped as much as 16 per cent from Friday, before paring its gain by about one-half.