US stocks edged higher on Monday, as trade tensions between the US and China showed signs of settling down, helping raise sentiment.
The MSCI world equity index gained 0.3 percent to $521.24, keeping its footing on a positive territory for the year.
Blue-chip Dow Jones 30 futures climbed 0.3 percent to $24,911.0, while the S&P 500 added 0.2 percent to $2,736.75. Tech-heavy Nasdaq 100 futures were up by 0.5 percent to $7,002.75.
The stocks appeared to be on track to extend their bullish pace on Monday, after a more than 2 percent rally last week, when shares acquired their highest weekly increase since March.
The Dow and S&P 500 were also able to crossed their 100-day moving averages, which a crucial level of technical support, for the first time in almost a month.
The softening tensions between the US and China also helped lift Asian stocks, with the MSCI's broadest index of Asia-Pacific shares outside Japan raising 0.6 percent to $577.04.
Japan’s Nikkei 225 gained 0.4 percent to ¥22,865.86, while Hong Kong’s Hang Seng index increased 0.1 percent to HK$31,541.08.
Shanghai Composite climbed by 0.3 percent to CN¥3,174.03, while the Shenzhen Composite fell by 0.1 percent to CN¥1,823.25.
Trump to Help ZTE Get Back Into Business
Stocks’ gains came as investors processed signs of easing trade tensions between the world’s two biggest economies, following US President Donald Trump’s unexpected pledge to get Chinese telecom equipment firm ZTE Corp. back in business.
Trump stated that he will work with Chinese President Xi Jinping to help quickly save China’s second-biggest telecom equipment maker, as too many jobs in the country were at risk. ZTE employs about 80,000 people.
Admitting that it made illegal shipments of American-made products to Iran and North Korea, ZTE’s failure to comply with the 2017 agreement resulted to the US Commerce Department to ban American companies from selling key components to the Shenzhen-based group for seven years.
ZTE was then unable to access vital components, such as semiconductors, pushing the company to announce last week that it has temporarily discontinued its main operations.
US firms provide at least a quarter of the components used in ZTE’s devices, including smartphones and telecom network equipment.
Trump’s announcement somewhat helped reduced tensions ahead of second round of high-level trade talks that start on Tuesday, even though Beijing has suggested last week that it does not intend to change its current view in the negotiations.
Fed Rate Hikes
With no major economic reports due for release on Monday, investors looking for hints from the Federal Reserve with regards to the pace of upcoming rate hikes this year.
Cleveland Fed President Loretta Mester reiterated on Monday her support for the bank’s gradual approach to increasing rates, since inflation has not yet achieved Fed’s 2 percent target in a sustained manner.
Mester also does not expect inflation to improve immediately, but she warned that the bank might have to hikes rates above 3 percent, if the US economy expanded at much faster rate than anticipated.
The central bank’s officials all agreed to raise borrowing costs at its policy meeting in March, projecting two more rate hikes this year, although several policymakers expect three. Fed increased rates three times in 2017.
The bank’s benchmark overnight lending rate is now at the target range of 1.50 percent to 1.75 percent.
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