FYI: The Dow Jones Industrial Average climbed more than 300 points, and investors sold safe-haven assets such as bonds and gold after China’s latest currency move eased concerns that a brewing trade spat between the two countries was about to move into an all-out currency war.
The Dow industrials rose 371 points, or 1.43%, to 26378, as 29 of the 30 stocks in the blue-chip index notched gains, including aerospace giant Boeing and software firm Microsoft . The S&P 500 also rose, adding 1.88%, and the Nasdaq Composite added nearly 2.24%.
Meanwhile, investors dialed back their appetite for safe-haven assets. Bond yields, which rise as prices decline, strengthened and gold prices fell.
Stocks in the U.S. and other parts of the world advanced after China’s central bank decided to fix the midpoint for onshore yuan trading at a rate just above 7 a dollar, slightly higher than analysts had been expecting and a sign the country is avoiding escalating tensions with the U.S.—for now. Shares in Europe rose sharply, while major indexes in Asia snapped multiday losing streaks.
The U.S.-China trade war entered a new phase earlier this week after the yuan depreciated below the crucial 7-a-dollar level on Monday, days after the U.S. threatened to expand tariffs on $300 billion of Chinese imports. That pushed stocks sharply lower on Monday, with all three major indexes suffering their biggest single-day pullbacks of the year.
Also feeding into the sense of relief was an unexpected turnaround in Chinese exports, which climbed 3.3% in July from a year earlier. In addition, the Bank of France’s July business survey indicated an acceleration in growth in the eurozone’s No. 2 economy. Economists at Daiwa Capital Markets called that report “arguably as upbeat as might have been hoped.”
But the Dow industrials and the S&P 500 remain off more than 3% from their all-time closing highs, and analysts predict stocks will struggle to move meaningfully higher without a trade resolution or firm signs the U.S. and China are making progress toward a deal.
On Thursday, investors pounced on popular corners of the market that struggled in recent days. Shares of technology stocks in the S&P 500 climbed 2%, recouping all of its losses from earlier in the week as most stocks in the group notched gains.
Advanced Micro Devices outpaced the broader sector though, adding 17% after saying it plans to release a new server chip.
Communication, industrial and consumer discretionary stocks all also rose, notching gains of more than 1.4%.
Financial stocks also got a boost, rising 1.6%, alongside the climb in bond yields. Higher interest rates tend to boost banks’ profitability by widening the spread between what they pay on deposits and charge on loans, which is known as net interest margin.
At the same time, the yield on the 10-year Treasurys rose to 1.758%, from 1.685% on Wednesday. Bond yields and prices move in opposite directions.
Gold prices traded down 0.8% to $1,507 a troy ounce after briefly slipping below $1,500 an ounce.
Elsewhere, the Stoxx Europe 600 added 1.7%, its biggest daily gain since June.
Japan’s Nikkei advanced 0.4%, snapping a four-day losing streak, while the Shanghai Composite rose 0.9%, notching its first gain in seven trading sessions. The Hang Seng and the Kospi Composite both also rose, adding 0.5% and 0.6%, respectively.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-08-08/your-evening-briefingMarketWatch:
https://www.marketwatch.com/story/dow-poised-for-modest-gain-as-china-sets-yuan-at-a-weaker-than-expected-level-2019-08-08/printWSJ:
https://www.wsj.com/articles/global-stocks-rally-after-wild-swings-on-wall-street-11565252968Bloomberg:
https://www.bloomberg.com/news/articles/2019-08-07/asia-stocks-face-muted-open-as-global-woes-mount-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-soars-371-points-disney-apple-stocks-rally/CNBC:
https://www.cnbc.com/2019/08/08/stock-market-trade-war-concerns-ease-trump-attacks-the-fed.htmlReuters:
https://www.reuters.com/article/us-usa-stocks/wall-street-surges-after-upbeat-economic-data-idUSKCN1UY1EVU.K:
https://uk.reuters.com/article/uk-britain-stocks/ftse-jumps-amid-soothing-china-nerves-miners-hargreaves-lead-idUKKCN1UY0S1Europe:
https://www.reuters.com/article/us-europe-stocks/china-respite-spurs-strong-bounce-in-european-shares-idUSKCN1UY0RUAsia:
https://www.cnbc.com/2019/08/08/asia-stocks-august-8-us-china-trade-war-yuan-trade-data.htmlBonds:
https://www.cnbc.com/2019/08/08/us-bonds-treasury-yields-pare-losses-as-global-growth-fears-fade.htmlCurrencies:
https://www.cnbc.com/2019/08/08/forex-markets-japanese-yen-central-banks-in-focus.htmlOil:
https://www.cnbc.com/2019/08/08/oil-markets-us-dollar-in-focus.htmlGold:
https://www.cnbc.com/2019/08/08/gold-markets-global-economy-central-banks-in-focus.htmlWSJ: Markets At A Glance:
https://markets.wsj.com/usMajor ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitorSPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-trackerSPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectorsCurrent Futures:
https://finviz.com/futures.ashx 
