Gold prices fall as geopolitical tensions ease; U.S. CPI looms
(Adds oil, gold settlement prices)
* MSCI's world index, U.S. stocks hit record highs
* Wall Street pares gains amid investor caution
* Pound surges as Conservative Party scores solid majority
* Oil nears three-month high on trade deal
By Herbert Lash
NEW YORK, Dec 13 (Reuters) - Global equity markets and oil
prices rose on Friday after China and the United States agreed
on an initial trade deal that rolls back some U.S. tariffs in
exchange for China's increased purchase of farm goods, coming
just ahead of a deadline for a new round of U.S. tariffs.
Beijing has agreed to buy $32 billion in additional
agricultural goods over the next two years, U.S. officials said,
from a baseline of $24 billion purchased in 2017, before the
trade war started. The 17-month-old trade dispute has roiled
financial markets and taken a toll on world economic growth.
U.S. President Donald Trump said he thought China would hit
$50 billion in agricultural purchases.
The agreement was announced as the Democratic-controlled
U.S. House of Representatives Judiciary Committee voted to
charge Trump with abuse of power and obstruction during an
impeachment inquiry. [nL1N28N087}
MSCI's gauge of global equities .MIWD00000PUS rose 0.32%,
while the pan-European STOXX 600 index .STOXX gained 1.25%,
boosted by hopes of an orderly Brexit after a landslide victory
for UK Prime Minister Boris Johnson in Thursday's elections.
But stocks on Wall Street pared initial gains on the news of
a preliminary U.S.-China trade deal. Given the heated nature of
the trade war between the world's two largest economies,
investors were slow to fully embrace the news, as both sides
have engaged in brinkmanship.
Investors are weary of the bantering rhetoric, while on the
margin Johnson's victory is bigger news than what could be
viewed as trade positioning, said Jack Ablin, chief investment
officer at Cresset Capital Management. "Investors at this point
are tired of the talk and are looking for a hand shake," he
said.
The back and forth in trade talks between China and the
United States is emblematic of a great power struggle, said
James Clunie, manager of the Jupiter Absolute Return Fund.
"If there are two great countries locked in a strategic war,
which is what a great power struggle is, then that is not going
away, that is probably with us for a long time," Clunie said.
MSCI's gauge of global stock performance .MIWD00000PUS and
the three main U.S. equity indexes hit record highs.
The Dow Jones Industrial Average .DJI rose 5.3 points, or
0.02%, to 28,137.35. The S&P 500 .SPX gained 1.05 points, or
0.03%, to 3,169.62 and the Nasdaq Composite .IXIC added 21.92
points, or 0.25%, to 8,739.24.
Earlier in Asia, Japan's Nikkei .N225 climbed 2.5% to a
14-month high and Shanghai blue chips .CSI300 advanced 2%.
Sterling gained following Johnson's win of a commanding
majority in Britain's Parliament, giving him the power to
deliver a clear exist from the European Union, though trade
talks are set to drag on for months, if not years. UK shares exposed to Britain's economy surged, with the
benchmark FTSE 100 .FTSE index gaining more than 2% at one
point as the rally offset the drag from a jump in sterling.
The pound GBP= rose to a 19-month high against the U.S.
dollar and shares in Europe rose to near all-time highs as
investors cheered the likelihood of an orderly Brexit. Sterling
GBP= last traded at $1.3335, up 1.31%.
The dollar fell against a basket of currencies as the
prospect of a China-U.S. trade deal and the British election
results sapped safe-haven demand for the greenback. The dollar
index .DXY fell 0.21%, with the euro EUR= down 0.09% to
$1.1118. The Japanese yen JPM= weakened 0.03% versus the
greenback at 109.36 per dollar.
Oil rose to its highest level in nearly three months as
investors cheered the progress in resolving the U.S.-China trade
dispute and the decisive election result in Britain. Brent
LCOc1 crude, the global benchmark, rose $1.02 to settle at
$65.22 a barrel. U.S. West Texas Intermediate (WTI) CLc1
settle up 89 cents at $60.07 a barrel.
During the session, both contracts jumped to their highest
levels since Sept. 17, with WTI topping $60 a barrel.
Gold prices were little changed as risk appetite was boosted
from the progress in the U.S.-China trade talks, though
investors remained cautious. U.S. gold futures GCcv1 settled
up 0.6% at $1,481.20 an ounce.
U.S. benchmark 10-year Treasury notes US10YT=RR rose 21/32
in price to yield 1.8261%,
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Gains for UK assets after Brexit election interactive https://tmsnrt.rs/34i1Kdh
Gains for UK assets after Brexit election png https://tmsnrt.rs/34nttt6
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