Wall Street indexes rallied and bond yields followed stocks higher on Friday as investors reacted to corporate earnings reports and U.S. President Donald Trump announced an agreement to end the longest ever U.S. government shutdown.
But the dollar index fell from the three-week high hit on Thursday, as traders eyed next week’s Federal Reserve meeting for insight on whether policy makers will continue to take a cautious tone on the interest rate path this year.
On Friday afternoon, on the 35th day of a record shutdown that has left hundreds of thousands of federal workers missing two paychecks, Trump announced a tentative deal with lawmakers to reopen the government until Feb. 15.
“It’s a contingent agreement that only lasts for three weeks. Some sort of agreement was priced in this morning,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas, though he noted that the question remains on whether a permanent deal can be reached by the end of the three weeks.
“Earnings have also been a positive component although the number of beats is lower than the last two quarters and expectations were lowered,” he added.
Based on the latest available data, the Dow Jones Industrial Average rose 175.92 points, or 0.72 per cent, to 24,729.16, the S&P 500 gained 21.27 points, or 0.80 per cent, to 2,663.6 and the Nasdaq Composite added 91.40 points, or 1.29 per cent, to 7,164.86.
Canada’s main stock index gained on Friday, driven by shares of precious metal miners as demand for gold, a safe-haven asset, rose due to concerns on global economic growth and political uncertainties.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 85.27 points, or 0.56 per cent, at 15,366.05.
Nine of the index’s 11 major sectors rose, led by a 2.3-per-cent gain in the materials sector.
Among the materials shares, gold miners were boosted by prices of spot gold. Yamana Gold Inc. rose 5.6 per cent, while Barrick Gold Corp. was up 2.4 per cent.
A 8.6-per-cent jump by Canopy Growth Corp. led the health care sector higher by 3 per cent. Aphria Inc. finished up 2.1 per cent, while Cronos Group Inc. rose 0.7 per cent.
The pan-European STOXX 600 index rose 0.61 per cent and MSCI’s gauge of stocks across the globe gained 1.02 per cent after touching its highest point since early December.
However, not all investors were optimistic as some turned to gold, often seen as safe-haven bet. Spot gold added 1.4 per cent to $1,298.48 an ounce, helped by the dollar decline.
In currency, the euro rebounded against the dollar after falling to its lowest level in six weeks Thursday when European Central Bank President Mario Draghi did not alter a downbeat assessment on the euro zone’s economy.
The euro up 0.95 per cent to $1.1412. The dollar index , which measures the dollar against six other currencies, fell 0.83 per cent.
According to the latest Reuters polls of hundreds of economists from around the world, a synchronized global economic slowdown is under way and any escalation in the U.S.-China trade war would trigger a sharper downturn.
In a note to clients, UBS Global Wealth Management’s chief investment officer, Mark Haefele, said that rhetoric on U.S.-China trade has become more positive and that Beijing has taken steps to stimulate its economy.
“While economic and earnings growth is slowing, we believe it is unlikely that growth will drop far below trend,” he said.
Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the next round of trade negotiations with Washington.
The British pound was up 0.8 per cent after The Sun newspaper reported on Thursday that Northern Ireland’s Democratic Unionist Party has privately decided to back Prime Minister Theresa May’s Brexit deal next week if it includes a clear time limit to the Irish backstop.
In U.S. Treasuries, 10-year yields bounced from a one-week low as looming Treasury supply next week and caution ahead of the Fed’s policy meeting and the government’s payrolls report added upward pressure.
Benchmark 10-year notes last fell 11/32 in price to yield 2.7513 per cent, from 2.712 per cent late on Thursday.
Oil prices rose as political turmoil in Venezuela threatened to reduce supply, but fresh data on surging U.S. fuel stocks and global economic woes weighed on sentiment.
Brent crude futures settled at $61.64 a barrel, up 55 cents, or 0.90 per cent. U.S. crude oil futures settled at $53.69 a barrel, up 56 cents, or 1.05 per cent.
ReutersWall St ends up on Washington shutdown deal
Reuters