Business World

Friday 15 November 2019

Trade deal talks and rate cut hopes propel S&P 500 to a record high

'Nine of the 11 major S&P sectors were trading higher, with technology providing the biggest boost.' Stock photo
'Nine of the 11 major S&P sectors were trading higher, with technology providing the biggest boost.' Stock photo

Arjun Panchadar

Key US share index the S&P 500 hit a record high yesterday as a possible trade deal between America and China, and rising bets on a third rate cut by the Federal Reserve, bolstered investor optimism.

Meanwhile, shares of Microsoft powered the three main stock indices. The tech giant's shares touched an all-time high and were last up 2.6pc, after it won the Pentagon's $10bn (€9bn) cloud computing contract, beating Amazon. Amazon shares dropped nearly 1pc.

The other two major indices were less than 1pc below their record levels.

President Donald Trump said he expected to sign a significant part of the trade deal with China ahead of schedule, but did not elaborate on the timing.

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This added to Friday's optimism, when Washington said it was "close to finalising" some parts of a trade agreement with China. Beijing confirmed on Saturday that "technical consultations" on some parts of the agreement were basically completed.

"Markets seem convinced the first deal will get done and that negotiations are progressing on the next deal," said Edward Moya, senior market analyst at Oanda.

The news comes as a relief to investors, who have been grappling with the fallout from the trade war, which was reflected in some dismal economic data this month.

This has raised odds for a quarter percentage point cut in US borrowing costs to 94pc, from 49pc last month.

The Fed will announce its decision at the end of its two-day meeting tomorrow.

The earnings season has managed to ease some concerns related to the impact of trade tensions on corporate America, with over 78pc of the 199 S&P 500 firms that have reported surpassing profit expectations.

Nine of the 11 major S&P sectors were trading higher, with technology providing the biggest boost.

Reuters

Irish Independent

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