• The Star Staff

World stocks zoom to 5-week highs on economic, stimulus hopes

Global stocks scaled five-week highs on Monday on hopes that more government stimulus was coming and the world economy was on the mend, while the Chinese yuan retreated from a 17-month high after a policy move over the weekend.

Investor optimism that Washington will work through talks that have repeatedly stalled to deliver another round of fiscal stimulus drove major U.S. stock indices to highs last seen in early September.

Hopes that the top Wall Street banks will announce a decent set of third-quarter earnings this week that show business activity was not as weak as feared also helped.

Slugged by stronger investor demand for risk, the U.S. dollar was pinned near a three-week low and gold, another safe-haven asset, stayed below a three-week high. The U.S. bond market is closed on Monday for Columbus Day.

The cheer over the economic outlook and government stimulus did not boost oil prices, which dropped as investors focused on a boost in supply.

The S&P 500 jumped by 65 points, or 1.89%, to 3,542.51, while the Dow Jones Industrial Average rose 316 points, or 1.11%, to 28,902.52. The Nasdaq Composite leapt 336 points, or 2.89%, to 11,916.49. All three indices touched highs not seen since Sept. 2.

Edward Moya, a senior market analyst at OANDA, a currency broker, said investors were shrugging off the uncertainty of U.S. stimulus negotiations and hoping instead that banks will not disappoint in their earnings.

A special event organized by Apple Inc on Tuesday also stoked speculation that the tech giant is set to unveil a new iPhone with 5G capabilities, boosting tech stocks across the board.

“There’s optimism that banks are going to post positive results,” Moya said. “If the consumer is not as weak as we thought, we might still have decent holiday spending.”

MSCI’s gauge of stocks across the globe climbed 1.43% to 592.96, while European stocks rose 0.72% to 373.00.

Bets that more U.S. stimulus was in the offing came in spite of indications that talks in Washington had stalled again, leading the Trump administration to call on Congress to pass a less ambitious coronavirus relief bill.

U.S. President Donald Trump on Friday had offered a $1.8 trillion coronavirus relief package after urging his team on Twitter to “go big” in negotiations with the Democrats to reach a deal.

A sluggish U.S. dollar kept the U.S. dollar index down 0.06% at 93.057.

The Chinese yuan was off 0.8% after sliding as much as 272 pips overnight in Asia, after the central bank cut foreign exchange forward reserve requirements that effectively lowers the cost of shorting the yuan.

The euro edged 0.14% lower to $1.1809 and the yen firmed 0.26% to 105.33 per dollar.

Gold was down 0.4% at $1,921.76 per ounce.

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