Market Rally Fueled by Trade Optimism as Bond Market Calms

Trade deal talk lifts stocks as bond selloff eases

Global markets wrapped up a tumultuous week on a more optimistic note, with stocks surging and bond yields easing after a flurry of trade deal-related developments.

The S&P 500 index jumped 1.2 per cent to 3,044.51, while the Dow Jones Industrial Average climbed 1.3 per cent to 26,656.44. The Nasdaq composite index rose 1.4 per cent to 8,444.57.

The gains came as investors responded positively to reports that the United States and China are making progress in their trade talks. The two nations have been at odds over trade policies, sparking concerns about the impact on global economic growth.

A report from the Wall Street Journal suggested that the two sides are nearing a deal that would ease some of the tariffs imposed on each other's goods. The news helped to lift sentiment in the markets, which had been battered in recent weeks by concerns about the trade war.

The bond market, which had been under pressure due to the trade tensions, also showed signs of easing. The yield on the 10-year U.S. Treasury note fell to 2.05 per cent from 2.11 per cent, while the yield on the two-year note fell to 1.85 per cent from 1.92 per cent.

The easing in bond yields helped to support stock prices, as lower interest rates can make it easier for companies to borrow money and invest in their businesses.

In addition to the trade developments, investors were also encouraged by a strong jobs report from the United States. The report showed that the U.S. economy added 136,000 jobs in August, beating expectations and suggesting that the labour market remains strong.

The gains in the markets came despite some concerns about the impact of Hurricane Dorian, which made landfall in the United States on Friday. The storm caused widespread damage and power outages, but it did not appear to have a major impact on the markets.

Overall, the markets wrapped up the week on a positive note, with stocks and bonds both showing signs of improvement. The gains were driven by a combination of factors, including the progress in trade talks and the strong jobs report.