Stocks rise, bonds fall on the situation around the shutdown and trade war

Stocks across Europe and Asia advanced and U.S. futures rose after news emerged of a tentative deal among American lawmakers to avert another government shutdown. Treasury yields climbed.

Carmakers led the advance in the Stoxx Europe 600 Index, while contracts on the Dow, Nasdaq and S&P 500 all pointed to a firmer open. The dollar held on to most of its recent gains after U.S. lawmakers said they reached an “agreement in principle” on border security funding that would avert a second government shutdown. The Trump administration said the president still wants to meet China’s Xi Jinping in an effort to end the trade war.

In Japan, the country’s 10-year bond yields remained in negative territory even after the central bank cut purchases of some longer-dated bonds for the first time since July in a regular operation. The institution has sought to taper its purchases while focusing on yield targets rather than quantitative easing. Nissan reported worse-than-expected results.

The prospect of a deal to keep the U.S. government open together with hints that President Donald Trump may reach an accord with China appear to be rekindling the rally in riskier assets after a turbo-charged start to the year showed signs of ebbing last week. A dovish shift by the world’s central banks has also helped, but at the same time has underscored the dilemma facing investors — join the chase for late-cycle gains, or gird themselves for a looming slowdown in growth.

Elsewhere, Brent crude rose after its lowest close in more than a week. Emerging markets shares climbed and their currencies edged higher. The pound held steady as U.K. Prime Minister Theresa May prepared to update lawmakers on the progress  — or lack thereof — of Brexit talks with the EU. The offshore yuan strengthened for the first time in five days.

Futures on the S&P 500 Index increased 0.6 percent as of 10:46 a.m. London time, the largest climb in more than a week. The Stoxx Europe 600 Index gained 0.6 percent. The MSCI All-Country World Index advanced 0.3 percent, the largest gain in a week. The MSCI Emerging Market Index increased 0.3 percent, the first advance in a week.

Stocks Rise, Bonds Slip on Shutdown, Trade Hopes, Bloomberg, Feb 12