**Stocks Surge on Trade Deal Hopes, Dollar Steadies Before Fed Meeting**
*Based on reporting by Tommy Wilkes for Reuters, supplemented with additional research and market commentary*
Global financial markets displayed remarkable optimism this week as hopes of a resolution to the ongoing trade dispute between the United States and China lifted investor sentiment, sending global equities to fresh multi-month highs. At the same time, the US dollar lost some momentum as investors exercised caution before the US Federal Reserve’s closely watched meeting, where the future direction of US interest rates is expected to become clearer.
## Stock Markets Rally on Trade Progress
World share markets rallied as positive signals from US-China trade talks boosted appetite for risk assets, drawing investors away from traditional safe havens.
– **European Equities:**
– Pan-European STOXX 600 index climbed to its highest level since January 2018, showing strong gains across most sectors.
– Germany’s DAX, a benchmark sensitive to global trade developments, surged more than 1 percent on the day, reflecting optimism around the reduction of trade barriers.
– **Asian Markets:**
– Japan’s Nikkei hit a 13-month high, buoyed by progress in trade discussions and a generally upbeat earnings season.
– Chinese shares extended their gains in anticipation of an economic boost if tariffs are rolled back and a “phase one” trade agreement is finalized.
– **US Markets:**
– Major Wall Street indices, including the S&P 500 and the Dow Jones Industrial Average, reached new record highs as investors grew more confident in a global economic recovery.
– Technology, industrials, and consumer discretionary stocks led the rally, while defensive sectors lagged behind.
This leap in equities has been attributed primarily to the optimism that a US-China trade deal will not only ease existing tariffs but could foster better economic cooperation between the world’s two largest economies. Over recent weeks, officials from both sides have signaled progress, with President Donald Trump stating that talks were “ahead of schedule.” Any trade deal is viewed as a major catalyst for global economic activity, which has been hampered in 2019 due to the ongoing disputes.
### Key Market Moves
– **Emerging market stocks** and currencies outperformed as prospects of a trade truce supported risk-taking behavior.
– **Safe-haven assets** such as gold and the Japanese yen retreated as investors pivoted away from protection.
– **US Treasury yields** rose, reflecting improved growth prospects and reduced appetite for safe assets.
## The US Dollar Steadies, Eyes on Fed Policy
While the mood in stock markets was decidedly risk-on, currency markets told a story of relative calm. The US dollar slipped slightly but remained in a tight trading range against a basket of key peers.
### Factors Influencing the Dollar’s Performance
– **Expectation of a Federal Reserve Rate Cut:**
– Markets widely anticipate the US central bank will cut interest rates by 25 basis points at its forthcoming meeting.
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