Stocks rally, then ease on U.S.-China trade deal; oil gains

NEW YORK — Oil prices rose and a gauge of global equity markets hit a new high on Tuesday as investors awaited the signing of a China-U.S. trade deal they hope will spur world economic growth, after the economy in 2019 saw its weakest year since the financial crisis.

Gold prices slid as the planned signing Wednesday of the Phase 1 trade deal dampened both the appeal of safe-haven bullion and the Japanese yen, which dropped to eight-month lows.

MSCI’s all-country world index and shares on Wall Street set intra-day highs before backing off a bit as investors said the long-awaited trade deal was priced into the market. Stocks in Canada and Australia also surged to records.

Stocks on Wall Street turned lower after Bloomberg reported that existing U.S. tariffs on $360 billion of Chinese imports will likely stay in place past the U.S. presidential elections in November as Washington reviews compliance with the trade pact.

Investors fear the global economy may not turn up enough to lift corporate earnings and share prices if tariffs remain in place for most of this year, said Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis.

“People thought the tariffs would come off, the arguing would quit and manufacturing would restart across the globe,” Paulsen said.

The Trump administration apparently would like to retain leverage over China to enforce the trade pact, he said, while noting that retaining the tariffs is just one factor affecting world growth, he said.

“But certainly it’s worth a trading headline in the afternoon,” Paulsen said.

Details are slowly emerging about the deal. China has pledged to buy almost $80 billion of additional manufactured goods from the United States over the next two years as part of a trade war truce, a source told Reuters

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