Global stocks give up some gains after solid start to year

Ivan Schwartz
January 14, 2019

Lower oil exports from Iran since November, when US resumed sanctions against the OPEC producer, have also supported crude.

The Dow Jones Industrial Average .DJI rose 91.67 points, or 0.39 percent, to close at 23,879.12, the S&P 500 .SPX gained 10.55 points, or 0.41 percent, to end at 2,584.96 and the Nasdaq Composite .IXIC added 60.08 points, or 0.87 percent, to finish at 6,957.08. -China trade talks in a positive light.

So far this year, investors have breathed a sigh of relief as hopes of a trade deal between the U.S. and China have risen and comments from officials at the U.S. Federal Reserve have suggested that the pace of interest rate increases could ease this year. Hong Kong's Hang Seng rose 0.4 percent to 26,633.47.

"Sentiment is greatly improved, and trade talk optimism has helped boost risk-appetite across the week", said Jasper Lawler, head of research at London Capital Group in a note on Friday, although he added that at this stage "there is a lack of anything concrete between the U.S. and China".

Adding to support for oil, the value of the USA dollar tumbled after a Federal Reserve official said the central bank isn't locked into a particular direction for interest rates. They said that the central bank will be especially cautious about pushing ahead with interest-rate increases after raising them four times past year.

Both oil price benchmarks had jumped by around 5 percent the previous day as financial markets around the world surged on the hopes that Washington and Beijing may be able to soon end their trade disputes, soothing fears of an all-out trade war between the two biggest economies and its possible impact on global growth. The talks come after President Donald Trump and Chinese leader Xi Jinping met and agreed to hold off on more tariffs for 90 days, on the sidelines of the G-20 summit in Argentina last month.

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ANALYST'S TAKE: "The sentiment pendulum has swung from USA recession fears to optimism for a dovish Fed and positive US-China trade talks. The return of risk appetite, in turn, has pressured the US dollar lower", DBS Group Research strategists Philip Wee and Eugene Leow said in a commentary.

The rise in the prices is seen as a result of the ability of OPEC to mobilise its members and others not to pump excess oil into the volatile market.

Benchmark 10-year notes US10YT=RR were last down 3/32 in price to yield 2.7261 percent after earlier rising to 2.747 percent, the highest since December 28. Prices fell for the first time in two weeks on Friday, retreating 2 percent to $60.48 a barrel.

Brent oil started the week at $57.84 per barrel at 06.45 GMT on Monday while WTI registered at $48.73 a barrel.

Brent crude was down almost 1 percent, or 60 cents, to $60.84 per barrel at 1400 GMT.

In currency markets, the dollar rose against the euro, boosted by technical factors after the euro hit key resistance levels.

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