Global stocks fueled by hopes on monetary policy, U.S.-China trade

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The euro slides and German bond yields hit a fresh record low in reaction to ECB President Mario Draghi’s comments indicating a possibility of new rate cuts or asset purchases

NEW YORK - Global stocks rallied on Tuesday and benchmark government bond yields tumbled after European Central Bank President Mario Draghi hinted at economic stimulus, while equities got an extra boost when U.S. President Donald Trump confirmed a meeting with China’s president amid the countries’ trade dispute.

The euro also slid after Draghi said the region’s central bank will ease policy again if inflation fails to accelerate, signaling one of the biggest policy reversals of his eight-year tenure. “It’s our view that the markets have been ahead of the central banks globally in signaling that there is a global economic slowdown underway, and that monetary policy in light of the current conditions are probably too tight and central banks need to reverse course, especially the Federal Reserve,” said Brad Peterson, regional portfolio advisor at Northern Trust Wealth Management in Chicago.

The Fed is expected to leave borrowing costs unchanged at its meeting this week but possibly lay the groundwork for a rate cut later this year.

 

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