A rise in US technology stocks and better than expected economic data in China pushed global equity markets higher on Monday, despite reports that Washington was considering delisting Chinese companies from American exchanges.
US President Donald Trump is looking at the move to further limit US investment in Chinese companies, sources said on Friday.
On Wall Street, the Dow Jones Industrial Average rose 155.53 points, or 0.58 per cent, to 26,975.78; the S&P 500 gained 20.89 points, or 0.71 per cent, to 2,982.68; and the Nasdaq Composite added 68.40 points, or 0.86 per cent, to 8,008.02.
China has warned of instability in global markets from any “decoupling” with the US, noting the US Treasury response that said there were no immediate plans to block Chinese listings.
There were few signs that investors were fleeing to safe-haven assets, with benchmark 10-year notes last down 4/32 in price to yield 1.6853 per cent, from 1.673 per cent late on Friday.
Market players said the threat of delisting was being considered as just a tactic before US-China trade talks resumed next week.
Investors are accustomed to Mr Trump's strong words before he eases up, said Luca Paolini, chief strategist at Pictet Asset Management.
“It’s a strategy that we have seen in the past, keeping the pressure very high and then settling for whatever deal is possible,” Mr Paolini said.
Any progress in talks next month would probably fall short of a comprehensive deal, he said.
“It’s more likely than not that there will some kind of agreement that would be more cosmetic in nature.”
Economic data from China on Monday showed sustained weakness in exports but a surprising improvement in domestic consumption.
Alessia Berardi, senior economist at Amundi Pioneer, said markets were playing down the likelihood of a major escalation in the trade war by Washington.
“The probability of implementing the [delisting] decision for the market is still quite low,” Ms Berardi said.
Chinese markets will trade only on Monday before a week-long holiday that marks the 70th anniversary of the founding of the People’s Republic of China.
The dollar was little changed against a basket of six major currencies, adding 0.1 per cent to 99.117. This month it reached 99.37, its highest in more than two years.
China's offshore yuan also held steady before the holiday, trading at 7.139 per dollar.
Oil prices slipped as the trade war continued to weigh on the growth outlook for China, the world’s largest crude importer.
Brent crude futures fell 1.3 per cent to $61.47 a barrel, while US crude dropped 0.9 per cent to $55.43.