US: Stocks up on China talks optimism, S&P hits new record

[NEW YORK] Wall Street surged on Monday on renewed optmism about US-China trade talks, with the S&P 500 hitting a new record, while the pound firmed against the dollar after the EU backed an extension on Brexit.

Wall Street investors also were buoyed by expectations that the Federal Reserve will proceed with another interest rate cut on Wednesday.

President Donald Trump repeated his confidence that Washington and Beijing are moving towards a partial "phase one" trade deal, which he expects to sign on the sidelines of the APEC summit in Santiago in mid-November.

"The market seems to be saying that between central bank easing and the steps towards enough of a trade agreement to stop tariffs from going up, the world economy is going to stabilize," said LBBW's Karl Haeling.

"This summer there was a great fear of a recession."

Adding to the momentum has been better-than-expected earnings, analysts said.

Companies in the S&P 500 are on track to see a decline of 3.7 per cent in the third quarter from the year-ago levels, but 80 per cent have reported better earnings per share than expected, according to Factset.

Large technology companies were broadly higher, with Apple, Amazon, Facebook and Google parent Alphabet all adding around one percent or more.

Tiffany surged 31.6 per cent after the company confirmed it had received and is reviewing LVMH's bid valuing the iconic high-end jeweler at US$14.5 billion.

Space tourism company Virgin Galactic made its market debut, soaring at first but then ending the day marginally lower, down 0.34 per cent.

EU EXTENDS BREXIT DEADLINE

European Union states on Monday agreed to postpone Brexit for up to three months, stepping in with a decision less than 90 hours before Britain was due to crash out with no divorce deal.

The new deadline is now January 31 - although the EU would allow an earlier date should London ratify a withdrawal agreement sooner.

Although the announcement helped the pound, its gains were modest.

British Prime Minister Boris Johnson wanted to call a snap general election for December 12, with a plan to persuade MPs to back his agreement before then - but lawmakers defeated the initiative.

"The decision to provide an extension must be seen as a positive thing, given how close we are to a disorderly Brexit," said Joshua Mahony, IG senior market analyst.

"However, while a no-deal has been averted for now, this extension points to more uncertainty and economic decline as businesses remain in the dark over where the country is heading."

Brexit uncertainties are impacting the outlook for HSBC, the British banking giant said on Monday, as it posted a fall in third-quarter profits.

Shares in the lender were down more than four per cent at one stage, making them the top loser on the FTSE 100 index, but they recovered a few pennies in late trade.

In Asian trading, stock markets climbed after China and the US said they were close to agreeing a mini trade deal.

AFP