Global stocks rallied Wednesday, even as the dollar traded near an eighteen month peak, as investors cheered reports of a possible breakthrough in U.S.-China trade talks this weekend at the G20 summit in Argentina.
White House economic adviser Larry Kudlow told reporters Tuesday that President Donald Trump and Xi Jinping would meet for dinner at the summit on Saturday, and while he cautioned that China's President "has an opportunity to change the tone and the substance of these talks", he nonetheless suggested that "President Trump has indicated he is open" to making a deal to resolve ongoing trade tensions and possibly halt new tariffs on China-made goods.
The olive branch from the White House was followed by an interview with China's ambassador to the United States, Cui Tiankai, who told Reuters that an all-out trade war between the world's two biggest economies was "unimaginable" and hoped the weekend talks could result in a way forward.
"We are against any trade war," Cui told the news agency, but also noted that China would "fight to safeguard our own interests."
The softening of tone on both sides, as well as the dollar's overnight gains, allowed stocks in Asia to book solid gains, with a weaker yen helping the Nikkei 225 in Japan rise more than 1% to close at the highest level in two weeks while the region-wide MSCI Asia ex-Japan benchmark was quoted 0.9% higher heading into the final hours of trading.
U.S. stocks were also showing early signs of extending last night's gains, with contracts tied to the Dow Jones Industrial Average suggesting a 150-point gain while those linked to the S&P 500 indicated a 13-point rise for the broader benchmark.
Salesforce.Com Inc. (CRM) shares were marked sharply higher in pre-market trading Wednesday after the customer relationship management software group posted stronger-than-expected third quarter earnings, and boosted its near-term outlook, as cloud computing computing sales continued to impress.
Salesforce shares were marked 8.75% higher in pre-market trading Wednesday, indicating an opening bell price of $138.70 each, a move that would extend its year-to-date gain past 30% and value the San Francisco, Calif.-based group at just over $100 billion.
European stocks, however, were muted in the opening hours of trading, even as the euro and the pound slipped to multi-week lows against the dollar, as investor sentiment remained tempered by the ongoing budget dispute between Rome and Brussels and risk that U.K. Prime Minister Theresa May's hard-fought Bexit deal could be rejected by Parliament in a vote scheduled for December 11.
The Stoxx Europe 600, the broadest measure of regional share prices, was marked 0.2% higher in Frankfurt while Britain's FTSE 100 booked a 0.1% gain thanks to modest gains for telecom and energy stocks.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, touched an 18-month high of 97.50 in overnight trading following a moderately hawkish speech from Federal Reserve Vice Chairman Richard Clarida in New York yesterday, during which the newly-appointed central banker said risks facing the U.S. economy have become "more symmetric and less skewed to the downside than when the current rate cycle began three years ago", suggesting the Fed was comfortable with its currency policy path.
However, investors will focus squarely on a follow-up speech from Fed Chair Jerome Powell later today in New York in order to clarify whether next year's rate hikes can be fully cemented into market expectations, and also whether recent criticism from President Trump will sway the FOMC from its stated desire to tame inflation with higher interest rates.
That pressure was on display again last night with comments published in a Washington Post interview that quoted the President as saying he wasn't "even a little bit happy with my selection" of Powell as Fed Chair, adding that "I think that the Fed is way off-base with what they're doing."
"I'm doing deals, and I'm not being accommodated by the Fed," said Trump said, who called the central bank a "much bigger problem than China" and urged them to halt pending rate hikes. "They're making a mistake because I have a gut, and my gut tells me more sometimes than anybody else's brain can ever tell me."
Global oil markets were active Wednesday, despite the stronger U.S. dollar, as investors tweaked prices heading into next week's OPEC meeting in Vienna and reports that an active pipeline in the North Sea would be shut in order to repair some corrosion damage, reducing output from a key oil field.
Prices were pressured to the downside, however, after a bigger-than-expected 3.45 million barrel rise in U.S. crude stockpiles reported by the American Petroleum Institute and comments from Saudi energy minister Khalid al-Falih that stated his country would need co-operation from OPEC members in order to agree to 2019 production cuts.
Brent crude contracts for January delivery, the global benchmark, were seen 10 cents lower from their Tuesday close in New York and changing hands at $60.17 per barrel while WTI contracts for the same month, which are more tightly liked to U.S gas prices, were marked 13 cents higher at $51.69 per barrel.