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S&P 500 Erases Weekly Loss as China Tensions Ease: Markets Wrap

Vildana Hajric and Brendan Walsh

(Bloomberg) -- Equities rallied after China’s stronger-than-expected daily fixing of its currency eased fears about a worsening trade conflict.

The S&P 500 Index posted its biggest advance in two months, building on gains in Europe and Asia and erasing its loss for the week. A surge in technology companies pushed the Nasdaq Composite up more than 2%. Treasury yields edged lower and the dollar weakened. Oil climbed.

Thursday’s move by the People’s Bank of China was seen as an effort to stabilize its currency and went some way toward easing market concern that peaked Monday, when a weak reference rate spurred concern that the trade war was heating up. Despite evidence of some renewed risk appetite, stocks are still well off the record highs reached last month and traders remain jumpy about the potential for escalation in the conflict.

“For now, as far as volatility, the worst is over,” Rick Bensignor, the founder of Bensignor Group and a former strategist for Morgan Stanley, said in an interview at Bloomberg’s New York headquarters. “China’s smartly doing what they can. On their part, I think it’s a good tactical move.”

The dollar extended its decline after President Donald Trump said a strong greenback was hurting U.S. manufacturers and urged the Federal Reserve to cut interest rates.

The Stoxx Europe 600 rose the most in seven weeks. A gauge of Asia stocks increased as China’s Shanghai Composite rebounded from the lowest level since February. The Australian dollar gained from its lowest level in a decade. Bitcoin hovered below $12,000, a level it’s failed to close above for one month.

Oil snapped a three-day losing streak after Saudi Arabia contacted other producers to discuss options to stem a rout that’s been driven by the worsening China trade conflict.

Here are the main moves in markets (all sizes and scopes are on a closing basis):

Stocks

The S&P 500 Index increased 1.9% at the close of trading in New York; the Nasdaq Composite added 2.2%.The Stoxx Europe 600 Index jumped 1.7%, the biggest increase in more than seven weeks.The MSCI Asia Pacific Index climbed 0.6%, the largest increase in almost three weeks.The Shanghai Composite Index jumped 0.9% for the biggest increase in more than five weeks.

Currencies

The Bloomberg Dollar Spot Index dipped 0.2%.The onshore yuan rose 0.2% to 7.0451 per dollar.The euro slipped 0.1% to $1.1187.The Australian dollar jumped 0.7% to $0.6807 for the biggest increase in three weeks.The Japanese yen climbed 0.3% to 106.01 per dollar.

Bonds

The yield on 10-year Treasuries fell one basis point to 1.72%.Germany’s 10-year yield increased two basis points to -0.56%, the first advance in two weeks.Britain’s 10-year yield rose four basis points to 0.52%.

Commodities

Gold rose 0.1% to $1,502.94 an ounce.West Texas Intermediate crude rose 3.2% to $52.75.

--With assistance from David Ingles, Adam Haigh, Andreea Papuc, Laura Curtis and Andrew Dunn.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Brendan Walsh in Austin at bwalsh8@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, ;Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh, Todd White

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