World stocks zoom to 5-week highs on economic, stimulus hopes
From Koh Gui Qing
(Reuters) - Global stocks hit a five-week high on Monday in hopes that more government stimulus will come and the global economy will improve as the Chinese yuan retreated from a 17-month high after a political move over the weekend.
Investor optimism that Washington will hold talks that have stalled repeatedly to provide another round of fiscal stimulus has pushed major US stock indices to highs last seen in early September.
Hoping that Wall Street's top banks will post decent third-quarter earnings this week, showing show business hasn't been as weak as feared, also helped amid the excitement of the latest's expected debut Apple Inc.'s iPhone fueled tech stocks on Tuesday.
Given stronger investor risk demand, the US dollar was near a three-week low and gold, another safe haven, stayed below a three-week high. The US bond market is closed for Columbus Day on Monday.
Cheers over the economic outlook and government stimulus did not boost oil prices, which fell as investors focused on increasing supply.
The S&P 500 rose 57 points, or 1.64%, to 3,534.22, just off its record high of 3,580.84 on September 2. The Dow Jones Industrial Average rose 250 points, or 0.88%, to 28,837.52.
Apple shares rose 6.4%, while Amazon shares rose 4.8% ahead of the Prime Day shopping event on October 13-14. This helped the Nasdaq Composite run its largest one-day rally in a month, at 296 points, or 2.56%, to 11,876.26.
"The market leaders are again the tech names, supported by the fact that the economy continues to expand," said Phil Blancato, Managing Director of Ladenburg Thalmann Asset Management in New York.
MSCI's global share price rose 1.43% to 592.96, a level not seen since September 2, while European stocks rose 0.72% to 373.00.
Betting that more U.S. stimulus was in sight came despite signs that Washington talks had stalled again, prompting the Trump administration to ask Congress to pass less ambitious coronavirus relief law.
US President Donald Trump offered a $ 1.8 trillion coronavirus aid package on Friday after urging his team on Twitter to "make it big" in negotiations with the Democrats to reach an agreement.
A sluggish US dollar held the US dollar index down 0.07% to 93.045.
The Chinese yuan lost 0.8% after falling 272 pips overnight in Asia after the central bank cut foreign exchange reserves, effectively reducing the cost of shorting the yuan.
The euro fell 0.1% to $ 1.1812 and the yen 0.26% to $ 105.33 per dollar.
Gold fell 0.36% to $ 1,922.70 an ounce.
Oil prices also fell after a force majeure at Libya's largest oil field was lifted, a Norwegian strike that affected production ended, and US producers began restoring production after the Hurricane Delta.
Brent crude fell $ 1.04, or 2.43%, to $ 41.81 a barrel, and US West Texas Intermediate lost $ 1.04, or 2.56%, to $ 39.56. JPMorgan and Citigroup kicked off the third quarter earnings season on Tuesday, followed by Goldman Sachs, Bank of America and Wells Fargo on Wednesday and Morgan Stanley on Thursday.
Refinitiv analysts showed Citigroup and Wells Fargo reported that net income was down 60%, while JPMorgan and Bank of America are expected to see a 30% decline.
Investment banks Goldman Sachs Group Inc and Morgan Stanley are expected to do better by announcing more modest declines of between 5% and 10%.
(Reporting by Koh Gui Qing; Editing by Steve Orlofsky and Aurora Ellis)
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