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Global Stocks Jump to Start the Week

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08/19/2019 | 06:45am EDT

By Caitlin Ostroff

-- Asian, European stocks jump

-- S&P 500, Dow futures tick higher

-- U.S. Treasury yields rise

Global stocks and U.S. futures climbed Monday on the prospect of progress in U.S.-China trade talks and expectations of central-bank stimulus measures across major economies.

The Stoxx Europe 600 rose 0.7% in late-morning trade, led by gains in its basic resources and banking sectors, with Deutsche Bank shares up 2.8%.

President Trump tweeted over the weekend that talks with China were going well and that Chinese officials could soon be visiting the White House for further negotiations. Deutsche Bank in a report pointed to those comments as having lifted investor sentiment.

The markets were also buoyed Monday after German Finance Minister Olaf Scholz hinted over the weekend that the nation may carve out about EUR50 billion ($55.55 billion) for a fresh fiscal stimulus package, according to Craig Erlam, a senior market analyst at Oanda. Germany's benchmark Dax index rose 0.9%.

Patrick Spencer, vice chair of equities at Baird, said European bank shares have gained on easing recession fears, having been "priced to a disaster scenario. They're in the bargain bin."

Mr. Spencer said the fall in recession fears as well as a Friday meeting of central bank leaders in Jackson Hole, Wyoming, has buoyed investor sentiment of further rate cuts and brought the market up. Investors will also be looking to the release of minutes from the Federal Reserve's most recent meeting to offer further clues on the central bank's policy outlook.

In the U.S., futures on both the S&P 500 and Dow Jones Industrial Average were up 0.7%.

In currencies, the British pound edged down against the euro, slipping 0.4%. The pound also slipped 0.3% against the U.S. dollar, which has experienced a prolonged rally against other currencies.

The pound's fall came on the heels of a leaked weekend report that predicted a no-deal Brexit would lead to shortages in medical supplies and food, reinforcing the negative impact of continued Brexit uncertainty.

The WSJ Dollar Index, which measures the currency against a basket of its peers, ticked up 0.1%.

Hong Kong stocks were among the best performers in Asia on Monday. The Hang Seng Index rose 2.1%, on pace for its best performance in two months, as there was some relief that the weekend's large-scale protest didn't end in violence.

Elsewhere in Asia, the Shanghai Composite rose 2.1%, while indexes in Japan and Korea rose less than 1% apiece.

Chinese shares stood out with a strong rally, buoyed by a fresh interest-rate reform by Beijing that is widely expected to result in easier monetary policy.

An official blueprint to develop the southern city of Shenzhen into a global technology hub and experiment with more financial liberalizations there made the gains on the smaller exchange even sharper.

Leading the pack were Shenzhen-listed technology firms and brokerages that stand to benefit from a proposed reform of share-listing policy. ZTE Corp.'s stock rose 6.1%, while Citic Securities increased 6.6%.

"Brokers are rising sharply because the Shenzhen development plan indicates stronger determination by the government to further open up the financial sector and encourage innovation," said Deng Wenyuan, a Suzhou-based analyst at Soochow Securities.

U.S. Treasury yields were up, after a brief inversion of 10-year and two-year yields last week stoked fears of a recession. The 10-year yield on Monday rose to 1.620%, from 1.540% on Friday. Yields rise when prices fall.

Eurozone government bond yields were also up from last week, with the U.K. 10-year gilt yield at 0.509% and the German 10-year bund at minus 0.637%.

Bond markets this week will be focused on speculation around a major stimulus packaged from the European Central Bank and German fiscal stimulus, said Commerzbank rates strategist Rainer Guntermann. Germany plans to sell a new 30-year bund on Wednesday.

In commodities, global benchmark Brent crude gained 0.6% to $58.94 a barrel. Gold dropped 0.9%.

Shen Hong and Steven Russolillo contributed to this article.

Stocks mentioned in the article
ChangeLast1st jan.
CHINA-SHANGHAI COMP 0.24% 3006.45 End-of-day quote.20.36%
CITIC LTD -0.60% 10.02 End-of-day quote.-17.46%
CITIC SECURITIES COMPANY -1.59% 22.97 End-of-day quote.45.78%
COMMERZBANK AG -6.15% 5.369 Delayed Quote.-1.04%
CRB COMMODITY INDEX 0.10% 195.01 End-of-day quote.0.00%
DAX -1.16% 12323.38 Delayed Quote.18.08%
DEUTSCHE BANK AG -3.37% 7.068 Delayed Quote.4.88%
DJ INDUSTRIAL -0.59% 26935.07 Delayed Quote.15.47%
EURO / BRITISH POUND (EUR/GBP) -0.03% 0.88235 Delayed Quote.-1.84%
EURO / US DOLLAR (EUR/USD) -0.34% 1.0979 Delayed Quote.-3.92%
HANG SENG -0.86% 26205.09 Real-time Quote.2.27%
LONDON BRENT OIL -1.50% 63.91 Delayed Quote.17.36%
NASDAQ 100 -0.99% 7823.553294 Delayed Quote.24.83%
NASDAQ COMP. -0.80% 8117.674437 Delayed Quote.23.32%
S&P 500 -0.49% 2992.07 Delayed Quote.19.36%
SOOCHOW SECURITIES CO LTD -1.92% 9.7 End-of-day quote.47.61%
STOXX EUROPE 600 -0.87% 389.45 Delayed Quote.16.04%
STOXX EUROPE 600 NR -0.78% 837.6 Delayed Quote.19.06%
US DOLLAR INDEX 0.24% 98.51 End-of-day quote.1.89%
WTI -1.72% 57.74 Delayed Quote.27.93%
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