China Stocks Soar, Oil Gains, Dollar Weakens: Market wrap

Global stocks jumped, led by a rally in Chinese financial shares, while the dollar weakened and oil extended gains ahead of a key meeting from crude producing countries.

Crude resumed a rally as Russia’s energy minister said a nine-month extension to supply cuts could include an option for an extra three months. The dollar fell as minutes from the Federal Reserve’s latest policy meeting showed heightened debate over the prospect of rate increases beyond June. The Shanghai Composite Index jumped the most since April amid speculation that state-backed funds were active in the market. South Korean stocks extended a record and the won climbed after the central bank kept rates on hold.

“There’s a fear of missing out on this rally and that’s still a huge driver,” said Karl Goody, private-wealth manager in Sydney at Shaw and Partners Ltd. “The U.S. economy looks reasonable but there are still issues coming out of China. You need to be cautious but still remain a little bit optimistic. There’s no strong reasons to sell.”

Global stocks are at a record, with markets in the U.S. recovering from worries surrounding the prospects for President Donald Trump’s reform policies. The Fed minutes confirmed the likelihood of a June rate increase, while casting some doubts over the trajectory for rates thereafter. Policy makers signaled they wanted more evidence that recent weakness in economic growth is transitory before removing monetary stimulus further.

Investors will be turning their attention to Vienna as ministers from OPEC and other major producing nations meet to cement an extension of their output cut agreement. The decision comes after last year’s pact failed to clear a global supply glut or deliver a sustainable price recovery.

In China, stocks are rallying a day after Moody’s Investors Service reduced its rating on the country amid concerns over rising debt and slowing economic growth. Sudden gains in China’s $6.6 trillion equity market often drive speculation that state-directed funds are intervening to bolster demand for shares. The surge also comes after Carson Block, the founder of Muddy Waters LLC, said China’s credit problems since the global financial crisis will reach a breaking point.

Here are key upcoming events:

OPEC meets in Vienna. The price of oil has climbed going into the discussions on expectations supply cuts will be cemented and extended.

South Africa releases its monetary policy decision later Thursday, while data on U.K. GDP is also due.

Here are the main moves in markets:

Commodities

Crude rose 0.7 percent to $51.74 a barrel as of 8:18 a.m. in London, after touching the highest level in more than a month.

Gold fell less than 0.1 percent to $1,258.08 an ounce.

Stocks

The MSCI Asia Pacific Index jumped 0.8 percent to the highest level since May 2015. Japan’s Topix index rose 0.2 percent, while Taiwan’s Taiex extended gains to the highest since 2000.

The Hang Seng China Enterprises Index soared 1.7 percent, climbing above 10,500 for the first time since March 29. The Shanghai Composite jumped 1.4 percent, the most since April 5, while the Hang Seng Index rose 0.8 percent to the highest in almost two years.

The Stoxx Europe 600 rose 0.1 percent.

South Korea’s Kospi index climbed 1.1 percent to an all-time high. The Bank of Korea, in its first decision since the nation elected a new president, left its key interest rate unchanged as household debt continues to rise and the economy shows signs of improvement.

Futures on the S&P 500 rose 0.3 percent. The underlying gauge rose 0.3 percent Wednesday.

Currencies

The Bloomberg Dollar Spot Index dropped 0.1 percent, after falling 0.3 percent on Wednesday.

The yen fell 0.2 percent to 111.76 per dollar after the Japanese currency climbed 0.3 percent Wednesday. The South Korean won rallied 0.9 percent, while China’s offshore yuan climbed 0.2 percent.

The euro gained 0.1 percent to $1.1233. The British pound also rose 0.1 percent.

Bonds

The yield on 10-year Treasury notes rose less than 0.1 percent to 2.26 percent, after losing three basis points to 2.25 percent on Wednesday.

Australian benchmark yields dropped four basis points to 2.44 percent.

French 10-year yields fell two basis points while those in Germany and the U.K. dropped three basis points.

Source: Bloomberg