Trade optimism lifts stocks at end of tumultuous year

NEW YORK: Equities around the world rose on Monday as possible progress in resolving the trade dispute between the United States and China engendered some investor optimism in what has been a punishing end of year for markets.

The U.S. benchmark S&P 500 stock index advanced in light volume after U.S. President Donald Trump said he held a "very good call" with China's President Xi Jinping on Saturday to discuss trade and claimed "big progress" was being made.

Chinese state media were more reserved, saying Xi hoped the negotiating teams could meet each other halfway and reach an agreement that was mutually beneficial.

The rise in U.S. equities mirrored that in Asian and European markets, which were also buoyed by trade optimism. MSCI's broadest index of Asia-Pacific shares outside Japan  ended up 0.6 percent, and Europe's STOXX 600  finished 0.5 percent higher.

Despite Monday's advance, equities were set to end the year largely in the red, victims of investor anxiety over trade tensions and slowing economic growth.

The S&P 500 is down more than 9 percent in December, on track for its largest decline since the Great Depression. For the year, the index is down more than 6 percent.

Asia-Pacific shares outside Japan ended down 16 percent for the year, while the STOXX 600 was more than 13 percent lower.

"We're coming into 2019 with uncertainty and everyone is in wait and see mode," said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago. "People are going to need to see proof before they dive in again."

On Monday, the Dow Jones Industrial Average rose 189.09 points, or 0.82 percent, to 23,251.49, the S&P 500 gained 13.82 points, or 0.56 percent, to 2,499.56 and the Nasdaq Composite added 33.62 points, or 0.51 percent, to 6,618.15.

MSCI's emerging markets index rose 0.4 percent, while the MSCI world stock index gained 0.51 percent.

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Yields on U.S. Treasuries fell on Monday, keeping with the trend over the past two months as investors moved to lower-risk investments.

Benchmark 10-year notes were last up 16/32 in price to yield 2.6824 percent, compared with 2.738 percent late on Friday.

The fall in Treasury yields reflects expectations of a slowdown, if not a pause altogether, in the Federal Reserve's progression of interest-rate hikes.

The precipitous drop in yields has undermined the U.S. dollar in recent weeks. The dollar index, which measures the greenback against a basket of six other currencies, was down 0.2 percent and on track to end December with a loss. It is, however, still set for its highest percentage gain since 2015.

On Monday, the dollar fell to a six-month low against the yen.

The euro was up 0.08 percent to $1.1445,  on track to end the year down nearly 5 percent against the dollar.

Oil is set to finish 2018 deep in negative territory, down more than 20 percent, as oversupply concerns have weighed. Both Brent and U.S. crude have fallen more than a third this quarter, the steepest decline since the fourth quarter of 2014.

On Monday, oil prices were higher in choppy trade. Brent crude futures were up 21 cents at $53.42 a barrel. U.S. West Texas Intermediate (WTI) crude futures were up 10 cents at $45.43 a barrel.