London — World stocks edged to 5.5 month highs on Tuesday, lifted by bets that a US fiscal stimulus package will be reached and by signs that China-US tensions have eased ahead of a crucial round of trade talks.
But Brent crude futures stayed close to five-month highs and the dollar index held at a one-week high after US treasury secretary Steven Mnuchin said he was optimistic a bipartisan stimulus deal will be reached soon. MSCI’s global equity index rose 0.4% while a benchmark of Asian shares excluding Japan gained nearly 1%. Japan’s Nikkei climbed 1.9%. The world index is now a whisker off February record peaks.
US and Chinese officials will hold talks on Saturday to review the first six months of the phase-one trade deal. While China is lagging targets on energy and farm goods purchases from the US, markets seem confident trade ties will be insulated from the diplomatic noise. Jason Borbora-Sheen, portfolio manager at Ninety One Asset Management, said headlines would generate oscillations, but the issue does not pose serious risks “from an equity perspective or from a corporate perspective, simply because the issue has been at the forefront of investors’ [minds]”.Tuesday’s gains follow a robust Wall Street session when the Dow and S&P 500 rose and investors rotated towards value stocks and out of tech, reflecting optimism over the growth outlook.