U.S. stocks, crude advance as stimulus talks, Trump’s improving health boost risk appetite

NEW YORK (Reuters) – Growing risk appetite helped push U.S. stocks and crude prices higher on Monday as renewed optimism surrounding stimulus negotiations and news of President Donald Trump’s health progress helped calm investor anxiety.

U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continued talks aimed at arriving at a bipartisan agreement on a new pandemic relief package. That revived hopes that a new round of stimulus could be in the offing more than two months after emergency unemployment benefits expired for millions of Americans.

“As long as we hear negotiations are continuing Mnuchin and Pelosi trying to narrow their conditions, the market will think they are making progress and something will happen soon,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

While the severity of Trump’s condition remained unclear, he took a brief ride in a presidential motorcade to wave to his supporters, as his doctors painted a rosy picture of the president’s health and White House Chief of Staff Mark Meadows expressed optimism Trump would soon be discharged.

In a tweet, Trump announced he expects to be discharged from the hospital early on Monday evening.

“As chaotic as this election has been, a healthy incumbent means someone will be at the helm the next few weeks,” Nolte added.

Democratic contender Joe Biden opened his widest lead in a month in the U.S. presidential race, according to a Reuters/Ipsos poll released on Sunday.

FILE PHOTO: The New York Stock Exchange is pictured in the Manhattan borough of New York City, New York, U.S., October 2, 2020. REUTERS/Carlo Allegri/File Photo

The Dow Jones Industrial Average .DJI rose 364.58 points, or 1.32%, to 28,047.39, the S&P 500 .SPX gained 46.69 points, or 1.39%, to 3,395.13 and the Nasdaq Composite .IXIC added 193.83 points, or 1.75%, to 11,268.84.

Positive health updates regarding Trump and a flurry of dealmaking activity helped European shares close at a two-week high.

The pan-European STOXX 600 index .STOXX rose 0.81% and MSCI’s gauge of stocks across the globe gained 1.36%.

Crude prices surged on waning uncertainties, and were further supported by an escalating oil workers strike in Norway, where six offshore oil and gas fields were shut down.

U.S. crude CLcv1 futures settled at $39.22 per barrel, a 5.86% gain. Brent crude advanced 5.14% to settle at $41.29 per barrel.

The safe-haven dollar dipped and riskier currencies outperformed on mounting stimulus optimism.

The dollar index .DXY fell 0.34%, with the euro EUR= up 0.49% to $1.1773.

The Japanese yen weakened 0.39% versus the greenback at 105.75 per dollar, while sterling GBP= was last trading at $1.2973, up 0.32% on the day.

Risk-on sentiment also pushed longer-term U.S. Treasury yields to five-year highs and steepened the yield curve.

Benchmark 10-year notes US10YT=RR last fell 19/32 in price to yield 0.7552%, from 0.694% late on Friday.

The 30-year bond US30YT=RR last fell 58/32 in price to yield 1.5568%, from 1.48% late on Friday.

Gold inched higher as the dollar slipped, despite gains in equities markets.

Spot gold XAU= added 0.8% to $1,913.78 an ounce.

Reporting by Stephen Culp; additional reporting by Danilo Masoni in Milan; Editing by Bernadette Baum

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